Business calculator
Break-Even Point Calculator
Calculate the unit sales and revenue needed to cover fixed costs, variable costs, and a target profit. The calculator also shows contribution margin and margin of safety for an expected sales volume.
Cost and Sales Inputs
Break-Even Results
- Contribution margin
- $30
- 60.0% of revenue
- Break-even units
- 334
- revenue: $16,667
- Units for target profit
- 500
- revenue: $25,000
- Expected profit
- $140,000
- margin of safety: 93.3%
What Is a Break-Even Point?
A break-even point is the sales volume where revenue covers all fixed and variable costs. Below break-even, the business loses money. Above break-even, each additional unit contributes to profit after variable costs are paid.
How to Calculate Break-Even Point
| Metric | Formula | Why it matters |
|---|---|---|
| Contribution margin per unit | Price per unit - Variable cost per unit | Shows how much each unit can contribute to fixed costs and profit. |
| Contribution margin ratio | Contribution margin per unit / Price per unit | Shows the percentage of revenue left after variable costs. |
| Break-even units | Fixed costs / Contribution margin per unit | Shows how many units must be sold before profit starts. |
| Break-even revenue | Break-even units x Price per unit | Shows the sales dollars needed to cover total costs. |
| Units for target profit | (Fixed costs + Target profit) / Contribution margin per unit | Shows the volume needed to hit a specific profit goal. |
Worked Example
Inputs
Fixed costs: $10,000
Price: $50 per unit
Variable cost: $20 per unit
Break-even
Contribution margin = $30
$10,000 / $30 = 334 units
Break-even revenue = $16,667
Target profit
($10,000 + $5,000) / $30 = 500 units
Revenue needed = $25,000
When to Use or Skip Break-Even Analysis
Use it for
- Setting a minimum monthly sales target.
- Testing pricing or supplier-cost changes.
- Evaluating a new product, location, or fixed-cost commitment.
- Explaining your plan in a business plan or lender discussion.
Be careful when
- You sell multiple products with different margins.
- Costs jump at capacity thresholds or staffing levels.
- Discounting, returns, churn, or seasonality change the actual margin.
- You need cash-flow timing, not only accounting profitability.
Official Business Planning Sources
Frequently Asked Questions
What is a break-even point?
A break-even point is the unit volume or sales revenue where total revenue covers fixed and variable costs. At that point the business has zero profit and zero loss.
What formula does this calculator use?
Break-even units equal fixed costs divided by contribution margin per unit. Contribution margin per unit equals selling price per unit minus variable cost per unit.
What is contribution margin?
Contribution margin is the amount each sale contributes after variable costs. It helps cover fixed costs first, then contributes to profit after the break-even point is passed.
Can I include a target profit?
Yes. To calculate the units needed for a target profit, add the target profit to fixed costs and divide the total by contribution margin per unit.
What are the main limits of break-even analysis?
Break-even analysis assumes price, variable cost per unit, fixed costs, and sales mix stay constant. Real businesses may face capacity limits, step costs, discounts, churn, seasonality, and changing product mix.
About This Calculator
Calculate break-even units, break-even revenue, contribution margin, margin of safety, and units needed for a target profit from fixed costs, price, and variable cost per unit.
Frequently Asked Questions
What is a break-even point?
A break-even point is the unit volume or sales revenue where total revenue covers fixed and variable costs. At that point the business has zero profit and zero loss.
What formula does this calculator use?
Break-even units equal fixed costs divided by contribution margin per unit. Contribution margin per unit equals selling price per unit minus variable cost per unit.
What is contribution margin?
Contribution margin is the amount each sale contributes after variable costs. It helps cover fixed costs first, then contributes to profit after the break-even point is passed.
Can I include a target profit?
Yes. To calculate the units needed for a target profit, add the target profit to fixed costs and divide the total by contribution margin per unit.
What are the main limits of break-even analysis?
Break-even analysis assumes price, variable cost per unit, fixed costs, and sales mix stay constant. Real businesses may face capacity limits, step costs, discounts, churn, seasonality, and changing product mix.
Mike is a software engineer with a background in applied mathematics. He develops and maintains SuperCalc's engineering, conversion, and math utility calculators.
- M.S. in Applied Mathematics, MIT
- Former quantitative developer
- 6 years building computational tools