Break-Even Calculator
Find out how many units you need to sell before your business starts making a profit.
Break-Even Calculator
Enter your costs and pricing to find your break-even point.
Break-Even Point
What Break-Even Analysis Actually Shows
This tool calculates the exact sales level at which total revenue equals total costs, resulting in neither profit nor loss. Below this break-even point, a business operates at a loss, while above it, every additional unit sold contributes directly to genuine profit. This makes break-even analysis a foundational tool for evaluating whether a specific pricing and cost structure can realistically become profitable.
How to Use the Break-Even Calculator
Enter your total fixed costs, representing expenses that stay constant regardless of sales volume, such as rent or salaried staff. Enter your variable cost per unit, representing costs that scale directly with each unit produced or sold. Enter your selling price per unit. Your break-even point, in both units and total revenue, appears instantly once calculated.
The Break-Even Formula This Calculator Applies
Break-even units equal fixed costs divided by the difference between selling price per unit and variable cost per unit, a difference commonly called the contribution margin. This calculator applies this formula automatically, then multiplies the resulting unit figure by selling price to also show your break-even point expressed in total revenue dollars.
Pro Tip: Every unit you sell contributes a fixed amount toward covering your overheads — that's the difference between selling price and variable cost, known as contribution margin.
Contribution per Unit = Selling Price − Variable Cost
Break-Even Units = Fixed Costs ÷ Contribution per Unit
Break-Even Revenue = Break-Even Units × Selling Price
Fixed costs stay constant regardless of sales volume. Variable costs scale with each unit sold.
Understanding Fixed Costs Versus Variable Costs
Fixed costs remain constant regardless of how many units a business sells, including expenses like rent, insurance, and salaried employee wages that do not fluctuate with sales volume. Variable costs, by contrast, change directly with production or sales volume, including raw materials, packaging, and any per-unit labor or shipping cost. Correctly categorizing each cost as fixed or variable is essential for an accurate break-even calculation.
Why Break-Even Analysis Matters Most for New Businesses
For a new business or a new product launch, break-even analysis reveals the minimum realistic sales target needed before the venture becomes financially sustainable, which directly informs pricing strategy, initial funding requirements, and realistic timeline expectations for reaching profitability. Running this calculation before committing significant resources helps avoid entering a venture with an unrealistic path to profitability.
Frequently Asked Questions
It is the specific sales level, in either units or total revenue, where total revenue exactly equals total costs, resulting in zero profit and zero loss for the business.
Fixed costs stay constant regardless of sales volume, such as rent, while variable costs change directly with each unit produced or sold, such as raw materials or per-unit shipping.
It reveals the minimum realistic sales target needed for financial sustainability, which directly informs pricing strategy and realistic funding and timeline expectations before significant resources are committed.
Contribution margin, the difference between selling price and variable cost per unit, is the denominator in the break-even formula, since it represents how much each unit sold actually contributes toward covering fixed costs.
Then you're losing money on every unit sold, and there's no break-even point at any volume. You'd need to raise the price or lower the variable cost before this model works.