Break-Even Point Calculator
Calculate the break-even point in units and revenue where total costs equal total revenue and a business neither makes a profit nor a loss.
How to use this tool
- Enter total fixed costs, selling price per unit and variable cost per unit in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your break-even point (units) and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Break-Even Units = Fixed Costs / (Selling Price − Variable Cost per Unit)
Break-Even Revenue = Fixed Costs / Contribution Margin Ratio
Contribution Margin Ratio = (Selling Price − Variable Cost) / Selling Price
How it works
The break-even point is the sales volume at which total revenues exactly equal total costs, yielding zero profit or loss. It is derived from cost-volume-profit (CVP) analysis, one of the fundamental tools in managerial accounting. Fixed costs are those that do not change with output (rent, salaries), while variable costs scale directly with units produced.
The contribution margin per unit (selling price minus variable cost) represents the amount each unit sold contributes toward covering fixed costs. Once cumulative contribution margins cover all fixed costs, the business begins generating profit. This calculator assumes a single-product scenario with constant prices and a linear cost structure.
Worked example
Small Business Break-Even Analysis
- Fixed monthly costs = $10,000 (rent, salaries, utilities).
- Selling price per unit = $50; variable cost per unit = $30.
- Contribution margin = $50 − $30 = $20 per unit.
- Break-Even Units = $10,000 / $20 = 500 units.
- Break-Even Revenue = 500 × $50 = $25,000.
The business must sell 500 units per month, generating $25,000 in revenue, to cover all its costs and break even.
Common mistakes to avoid
- Treating semi-variable costs (e.g., a tiered utility bill) as purely fixed or purely variable, which misstates the true break-even point.
- Forgetting that break-even is a gross margin concept — it does not include tax, which means the company may need to exceed break-even revenue to also cover its tax liability.
- Calculating break-even on total sales when a business sells multiple products with different margins — use a weighted-average contribution margin or separate break-even per product line.
Key terms
- Break-Even Point
- The level of sales at which total revenues equal total costs, resulting in neither profit nor loss.
- Fixed Costs
- Costs that remain constant regardless of production volume, such as rent, insurance, and fixed salaries.
- Variable Costs
- Costs that change directly with the level of production or sales, such as raw materials or direct labor per unit.
- Contribution Margin
- The selling price per unit minus the variable cost per unit; the amount each unit contributes to covering fixed costs.
- Contribution Margin Ratio
- Contribution margin expressed as a percentage of the selling price, used to calculate break-even revenue.
Frequently asked questions
- What happens if I sell below the break-even price?
- Each unit sold below the break-even price increases the loss because the selling price does not cover the full variable cost plus the allocated share of fixed costs.
- Can break-even analysis be used for a service business?
- Yes. Replace "units" with billable hours or service engagements. Variable cost per unit might include contractor fees or materials per service call.
- How does a price increase affect the break-even point?
- A higher selling price increases the contribution margin per unit, so fewer units need to be sold to cover fixed costs — the break-even point in units falls.