Break-Even Calculator
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What Your Result Means
- Break-Even Units: The minimum number of units you need to sell to cover all fixed costs. Every unit sold beyond this point generates profit.
- Break-Even Revenue: The total sales revenue needed to reach break-even — break-even units multiplied by your price per unit.
- Contribution Margin per Unit: How much each unit sold contributes toward covering fixed costs (price minus variable cost). Higher margins mean fewer units needed to break even.
- Contribution Margin %: The contribution margin as a percentage of the selling price. A 40% margin means 40 cents of every revenue dollar goes toward fixed costs and profit.
How This Calculator Works
You enter your total fixed costs, selling price per unit, and variable cost per unit. The tool subtracts variable cost from price to get the contribution margin, then divides fixed costs by the contribution margin to find the break-even point in units. Revenue is simply break-even units multiplied by price. It assumes a single product, constant pricing, and linear variable costs — real businesses may need to adjust for volume discounts, mixed products, or step-fixed costs.
Quick Questions
What counts as a fixed cost?
Fixed costs stay the same regardless of how many units you sell — rent, salaries, insurance, loan payments, and subscriptions are common examples. If a cost increases when you sell more, it's likely a variable cost instead.
What counts as a variable cost?
Variable costs scale with production or sales volume — raw materials, shipping per unit, sales commissions, and payment processing fees are typical examples. If the cost exists even when you sell nothing, it's a fixed cost.
What if I sell multiple products?
This calculator assumes a single product. For multiple products, use a weighted average contribution margin based on your expected sales mix, or calculate break-even for each product separately using its allocated share of fixed costs.
How can I lower my break-even point?
Three levers: reduce fixed costs (e.g., negotiate rent), increase the selling price, or reduce the variable cost per unit. Any change that increases the contribution margin per unit will lower the break-even threshold.
Is break-even the same as profitability?
No — break-even is the zero-profit point. You need to exceed break-even to generate a profit. Many businesses set a target profit and work backward to find the sales volume needed: (fixed costs + target profit) ÷ contribution margin.
Sources
- SBA — Calculate Your Startup Costs (fixed vs. variable cost categorization for new businesses)
- Investopedia — Break-Even Analysis (formula explanation and business applications)
- Corporate Finance Institute — Break-Even Analysis (contribution margin method and multi-product extensions)
Method & review
Estimate only. Results reflect your inputs and standard formulas — they are not financial, tax, legal, health, or investment advice. Verify important decisions with a qualified professional.