Free calculator
Break-even calculator
Enter your fixed costs, the price of one unit and what each unit costs to make or deliver. You get the break-even point in units and in sales, the contribution margin behind it, and the volume you'd need to reach a profit target.
Costs and price
Costs that don't change with volume: rent, salaries, insurance, software.
Costs that rise with each unit: materials, direct labor, shipping, card fees.
Leave at 0 for break-even.
The break-even formulas
A business with $50,000 of fixed costs sells a product for $50 that costs $30 in variable costs. Each sale contributes $20 toward fixed costs, a 40% contribution margin ratio. It breaks even at 2,500 units, or $125,000 of sales. To earn $20,000 on top, it needs 3,500 units.
What moves the break-even point
Raise the price to $55 and contribution per unit rises to $25, so break-even falls to 2,000 units. Higher fixed costs or higher variable costs move it the other way. Testing a few prices in the calculator shows how much volume a discount has to win back.
The calculator rounds units up, because you can’t sell part of a unit. It assumes a constant price and variable cost over the volume you’re testing; if either changes with volume, run each range separately.
Related measures
- Gross margin uses cost of goods sold rather than variable cost, so it can include fixed production overhead.
- Payback period measures how long an investment takes to repay itself.
- Financial ratios cheat sheet: profitability, liquidity and leverage ratios on one page.
Break-even: questions
- How do you calculate the break-even point?
- Divide fixed costs by the contribution margin per unit, which is the selling price minus the variable cost per unit. With $50,000 of fixed costs, a $50 price and $30 of variable cost, each unit contributes $20, so break-even is 2,500 units.
- How do I find break-even in sales dollars?
- Divide fixed costs by the contribution margin ratio, contribution per unit as a share of price. In the example, $20 ÷ $50 = 40%, and $50,000 ÷ 40% = $125,000. This works even when you sell many products, as long as the sales mix holds steady.
- What counts as a fixed cost?
- A cost that stays the same over the range of volume you're planning for: rent, salaried staff, insurance, software subscriptions, loan payments. Variable costs rise with each unit sold, such as materials, direct labor paid per unit, shipping and card processing fees.
- What's the margin of safety?
- How far sales can fall before you reach break-even: (Actual or budgeted sales − Break-even sales) ÷ Actual or budgeted sales. If you expect to sell 3,000 units and break even at 2,500, your margin of safety is 500 units, or about 17%.
- Is break-even the same as payback?
- No. Break-even is a volume in a period: the sales that cover that period's fixed costs. Payback is a length of time: how long until cash from an investment repays what it cost. The payback period calculator answers the second question.