Break-Even Calculator
Work out break-even units and sales from fixed costs, price and variable cost, with contribution margin, target-profit volume and a cost-volume chart.
The interactive tool loads here when JavaScript runs.
About this toolWhat is the Break-Even Calculator?
The break-even point is the sales volume where revenue exactly pays for every cost, so profit is zero. Below it each period loses money; above it every extra unit adds its contribution to profit. Enter your fixed costs for a period, the selling price per unit and the variable cost per unit, and this calculator returns the break-even units, the break-even revenue, the contribution margin and its ratio.
Add a target profit to see how many units you need to earn it, with an optional tax rate if the target is after tax. Add your expected sales to get profit at that volume, the margin of safety and the degree of operating leverage. A cost-volume-profit chart marks where the revenue and total cost lines cross, and a small table shows how break-even volume moves if you change the price by up to 20% either way.
Everything is calculated in the browser and the inputs are saved in the link, so you can share a scenario with a co-founder or an accountant.
- Break-even units (exact and rounded up) and revenue
- Contribution margin per unit and ratio
- Target profit volume, with optional after-tax target
- Margin of safety and degree of operating leverage
- Cost-volume-profit chart and price sensitivity table
How to use the Break-Even Calculator
- Enter fixed costs for one period (a month or a year): rent, salaries, insurance, software, loan interest.
- Enter the selling price per unit and the variable cost per unit, meaning costs that rise with each sale such as materials, shipping, payment fees and sales commission.
- Optionally add a target profit and a tax rate. With a tax rate set, the target is treated as profit after tax.
- Optionally add your expected unit sales to see the profit, margin of safety and operating leverage at that volume.
- Read the break-even cards and the chart, then use the price table to test discounts or price rises.
Worked examples
Textbook break-even
Input
Fixed costs 80,000; price 250; variable cost 150
Output
Contribution 100.00 per unit (40%); break-even 800 units, 200,000.00 revenue
Every unit covers 100 of fixed cost. 80,000 / 100 = 800 units, and 80,000 / 0.40 = 200,000 of sales.
Units for a profit target, with expected sales
Input
Same costs, target profit 20,000, expected sales 1,000 units
Output
1,000 units for the target (250,000.00 revenue); margin of safety 20%; operating leverage 5x
At 1,000 units contribution is 100,000 and profit 20,000. Leverage of 5 means a 10% change in sales moves profit by about 50%.
A 10% price cut
Input
Same costs, price 225 (shown in the price table)
Output
Break-even rises from 800 to 1,067 units
The cut takes 25 off a 100 contribution, so you need a third more volume just to stand still.
Background and insight
The method is classic cost-volume-profit (CVP) analysis from management accounting. Each unit sold contributes its price minus its variable cost toward fixed costs. Break-even units = fixed costs / contribution per unit. Break-even revenue = fixed costs / contribution margin ratio, where the ratio is contribution divided by price. With fixed costs of 80,000, a price of 250 and a variable cost of 150, each unit contributes 100, so break-even is 800 units or 200,000 in sales.
Break-even units are often fractional. The calculator shows the exact figure and rounds up to the whole unit you actually have to sell, because selling 333 of a needed 333.33 still leaves a small loss.
CVP rests on assumptions you should keep in mind: price and variable cost per unit stay constant at every volume, fixed costs stay fixed over the range you are looking at, and everything produced is sold. Real businesses get volume discounts, hire extra staff at certain levels and sell a mix of products, so treat the result as a planning number for a relevant range rather than a precise forecast.
Common use cases
Testing a business idea
Before launching, check whether the volume needed to cover rent and salaries is realistic for your market.
Pricing decisions
Compare break-even volume at several prices to see whether a discount campaign can pay for itself.
Hiring or a new lease
Add the new fixed cost and see how many extra units each month it commits you to selling.
Loan and investor conversations
Show lenders the margin of safety between expected sales and break-even, which is a direct measure of downside room.
Tips and limitations
- Be strict about what is variable. Card processing fees, packaging, returns and sales commission all scale with units and belong in variable cost.
- Keep the period consistent: monthly fixed costs give monthly break-even units.
- If price is at or below variable cost the tool reports that there is no break-even, because no amount of volume covers fixed costs.
- For several products, use a weighted average price and variable cost based on your expected sales mix.
- Operating leverage cuts both ways: a business with high fixed costs gains fast above break-even and loses fast below it.
Frequently asked questions
What is the break-even formula?
Break-even units = fixed costs / (price per unit - variable cost per unit). Break-even revenue = fixed costs / contribution margin ratio, where the ratio is (price - variable cost) / price. With 80,000 fixed, a 250 price and a 150 variable cost, that is 800 units and 200,000 of sales.
What is contribution margin?
It is what each sale leaves after its own variable costs: price minus variable cost per unit. As a ratio it is that amount divided by price. It is the money available to pay fixed costs and, once they are covered, to become profit.
How many units do I need to sell to make a target profit?
Add the target to fixed costs and divide by contribution per unit: (fixed + target) / contribution. For an after-tax target, first divide it by (1 - tax rate) to get the pre-tax profit needed. Enter the tax rate in the calculator and it does this for you.
What is the margin of safety?
It is how far expected sales can fall before you reach break-even, shown as a percentage of expected sales: (expected - break-even) / expected. Expected sales of 1,000 units against a break-even of 800 give a 20% margin of safety.
Should break-even units be rounded up or down?
Up. You cannot sell part of a unit, and rounding down leaves you just short of covering costs. The calculator shows the exact value and the rounded-up figure separately.
Why does a small discount raise break-even volume so much?
Because the discount comes entirely out of contribution, not out of price as a whole. Cutting a 250 price by 10% removes 25 from a 100 contribution, so each unit covers 25% less fixed cost and break-even rises by a third.
Is break-even analysis the same as payback period?
No. Break-even finds the sales volume that covers costs in a period. Payback period measures how long it takes cash returns to repay an initial investment. For investment returns use the ROI or NPV and IRR calculators.
Is there an in-depth guide to the Break-Even Calculator?
Yes. “Margin, Markup and Break-Even: The Arithmetic of Pricing” covers the background, how it works, common pitfalls and worked examples. Read the full guide.
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