How to use
Enter your fixed costs for the period (rent, salaries, subscriptions), the price per unit and the variable cost per unit (materials, fees, shipping). You’ll see how many units you need to sell and how much revenue it takes to break even.
If you need a profit, not just to break even, enter a target profit for the period: you’ll see how many units it takes — (fixed costs + target profit) ÷ contribution margin per unit. With a target of 0 that’s the break-even point. On the chart, the revenue and cost lines cross at the break-even point; to the right of it you’re in profit.
Formulas
- Contribution margin per unit = price − variable cost.
- Break-even units = fixed costs ÷ contribution margin per unit (rounded up).
- Break-even revenue = units × price.
- Contribution margin ratio = contribution margin ÷ price × 100%.
Example
Fixed costs are $10,000 a month, the price is $50 and variable cost is $30 per unit. The contribution margin is $20 (40% of the price), so you break even at 500 units, or $25,000 in monthly sales. Every unit sold beyond that adds $20 of pre-tax profit.
FAQ
What if the price doesn’t exceed the variable cost? Then every sale increases the loss and there’s no break-even point — the calculator shows an error.
How do I lower the break-even point? Raise the price or cut variable or fixed costs. To see how price relates to cost, try the markup calculator and the margin calculator.
Are taxes included? No. If a tax is charged on sales, you can add it to the variable cost per unit.
This is a simplified model: it assumes a single price and fixed costs that don’t change with volume.