Break-Even Point Calculator
Break-Even Point Calculator
Break-even analysis answers a fundamental business question: how much do I need to sell before I stop losing money? It divides your fixed costs (rent, salaries — costs that don't change with sales volume) by your contribution margin per unit (price minus variable cost per unit) to find the exact sales volume where total revenue equals total costs.
New businesses and product launches use this before committing to a price or cost structure, to sanity-check whether the required sales volume is realistically achievable given market size and competition.
- Formula: Break-Even Units = Fixed Costs ÷ (Price − Variable Cost per Unit).
- Contribution Margin: Price minus variable cost is what each sale contributes toward covering fixed costs — a low contribution margin means you need very high volume to break even.
- Beyond Break-Even = Profit: Every unit sold past the break-even point contributes its full margin directly to profit, since fixed costs are already covered.
What counts as a fixed cost vs a variable cost?
Fixed costs stay the same regardless of sales volume (rent, salaries, insurance); variable costs scale with each unit sold (materials, packaging, per-unit shipping).
What if my price is lower than my variable cost?
You can never break even in that case — every sale loses money regardless of volume. The price must exceed the variable cost per unit for break-even analysis to be meaningful.
Break-Even Point Calculator
Break-even analysis answers a fundamental business question: how much do I need to sell before I stop losing money? It divides your fixed costs (rent, salaries — costs that don't change with sales volume) by your contribution margin per unit (price minus variable cost per unit) to find the exact sales volume where total revenue equals total costs.
New businesses and product launches use this before committing to a price or cost structure, to sanity-check whether the required sales volume is realistically achievable given market size and competition.
- Formula: Break-Even Units = Fixed Costs ÷ (Price − Variable Cost per Unit).
- Contribution Margin: Price minus variable cost is what each sale contributes toward covering fixed costs — a low contribution margin means you need very high volume to break even.
- Beyond Break-Even = Profit: Every unit sold past the break-even point contributes its full margin directly to profit, since fixed costs are already covered.
What counts as a fixed cost vs a variable cost?
Fixed costs stay the same regardless of sales volume (rent, salaries, insurance); variable costs scale with each unit sold (materials, packaging, per-unit shipping).
What if my price is lower than my variable cost?
You can never break even in that case — every sale loses money regardless of volume. The price must exceed the variable cost per unit for break-even analysis to be meaningful.