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Break-Even CalculatorUnit Economics · Margin Analysis
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Step-by-step breakdown
This free break even point calculator performs a complete break even analysis to find the exact sales volume — in units and in revenue — required to cover all your costs. Use the break even formula by entering your fixed costs, variable cost per unit, and selling price to instantly see your break even point, contribution margin, and how many units you need to sell to hit a target profit. Whether you are determining break even point for a new product launch or running a break even point and break even analysis for an existing business, this calculator shows the complete picture.
All calculations use standard published formulas. Results are for informational use only.
Calculation details
With fixed costs of $50,000.00, a selling price of $100.00, and variable cost of $40.00/unit, your contribution margin is $60.00/unit. You need to sell 834 (rounded up) units ($83,333.33 in revenue) to break even.
Break-even units
834 (rounded up)
$83,333.33 in revenue to break even
$60.00
Contribution/unit
60.00%
Contribution ratio
1,000
Target units
Variable 40%Contribution 60%
Getting started
How to calculate break even point — step by step
1
Enter fixed costs
Enter all costs that do not change with sales volume: monthly rent, loan payments, insurance, software subscriptions, and fixed salaries. These are the costs you pay whether you sell one unit or ten thousand.
2
Enter selling price per unit
Enter the price each customer pays for one unit of your product or service. This is your revenue per sale.
3
Enter variable cost per unit
Enter the direct cost you incur for each unit: materials, packaging, direct labor per item, and per-unit shipping costs. These scale directly with volume.
4
Add target profit (optional)
Enter a profit goal to see exactly how many units you need to sell to reach it, in addition to the break-even volume.
All inputs update results live. Use this data to check profitability at a specific sales volume after you know your break-even point.
The calculation
Step-by-step: how your break-even is calculated
1
Find Contribution Margin
Contribution Margin = Selling Price - Variable Cost
= $100.00 - $40.00
Contribution margin = $60.00 per unit
2
Calculate Contribution Margin Ratio
Ratio = (Contribution Margin / Selling Price) x 100
= ($60.00 / $100.00) x 100
Contribution margin ratio = 60.00%
3
Compute Break-Even Units
Break-Even Units = Fixed Costs / Contribution Margin
= $50,000.00 / $60.00
Break-even = 834 (rounded up) units
4
Compute Break-Even Revenue
Break-Even Revenue = Break-Even Units x Selling Price
= 834 x $100.00
Break-even revenue = $83,333.33
5
Compute Units for Target Profit
Target Units = (Fixed Costs + Target Profit) / Contribution Margin
= ($50,000.00 + $10,000.00) / $60.00
Target units = 1,000
Examples
Break even worked examples — formula for calculating break even
E-commerce product
112 units to break even
Fixed $3,000/mo · Price $45 · Var Cost $18
$5,040
Break-even revenue
SaaS subscription
128 subscribers
Fixed $12,000/mo · Price $99/mo · Var Cost $5/user
$12,672 MRR
Monthly recurring revenue
Service business
23 clients/month
Fixed $8,000/mo · Fee $500 · Var Cost $150
43 clients
To earn $7k target profit
Strategy
Quick tips for break even analysis and determining break even point
Include all fixed costs
Owner salary, loan payments, and annual expenses (insurance, licenses) converted to monthly amounts all belong in fixed costs.
Use gross selling price
The selling price should be the amount the customer pays, not net of any platform percentage. Adjust variable costs to account for transaction fees.
Break even per product line
If you sell multiple products, run a separate break-even analysis for each using its own fixed cost allocation and contribution margin.
Add a profit target
Break-even without a profit target is survivalism. Use the target profit field to see what sales volume is needed for a viable business, not just one that covers costs.
FAQ
Frequently asked questions
Q
What is the break-even point?The break-even point is the level of sales at which total revenue exactly equals total costs - meaning no profit and no loss. Below the break-even point, the business is losing money. Above it, every unit sold contributes to profit. It is expressed in units (how many you need to sell) and in revenue dollars (how much you need to earn). Knowing your break-even point is fundamental to pricing decisions, launch planning, and evaluating business viability.
Q
What is the break-even formula?Break-Even Units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). The denominator - Selling Price minus Variable Cost - is called the contribution margin per unit. It represents how much each unit sold contributes to covering fixed costs. Once fixed costs are covered, each additional unit sold generates that same contribution margin as pure profit.
Q
What are fixed costs vs. variable costs?Fixed costs remain the same regardless of how many units you sell: rent, insurance, salaries, loan payments, and software subscriptions. Variable costs change directly with each unit produced or sold: raw materials, packaging, direct labor per unit, shipping per order. The distinction is crucial because break-even analysis depends on this split - only variable costs affect the contribution margin.
Q
What is contribution margin?Contribution margin per unit = Selling Price - Variable Cost per Unit. It is the amount each unit 'contributes' to covering fixed costs - and then to profit once fixed costs are fully covered. Contribution margin ratio = Contribution Margin / Selling Price x 100. Dividing total fixed costs by the contribution margin gives the break-even volume in units.
Q
How does selling price affect the break-even point?Increasing the selling price reduces the break-even volume because each sale generates more contribution margin, covering fixed costs faster. Conversely, lowering the price increases the required volume. For example, raising the price from $50 to $60 on a product with $20 variable cost and $10,000 fixed costs: break-even drops from 333 units to 250 units - a 25% reduction in required sales volume.
Q
What if my variable cost is equal to or greater than the selling price?If variable cost equals or exceeds the selling price, the contribution margin is zero or negative - meaning each unit sold loses money or breaks even on a per-unit basis, and fixed costs can never be covered. No amount of additional sales volume can reach break-even. This indicates fundamental pricing or cost problems that need to be resolved before the business model is viable.
Q
What is the margin of safety?The margin of safety is the difference between current (or projected) sales and the break-even point. It represents how much sales can decline before the business starts losing money. Margin of Safety = Actual Units - Break-Even Units. This calculator shows both the break-even point and the contribution margin so you can calculate your margin of safety against your own sales projections.
Q
Can break-even analysis be used for a service business?Yes - the same formula applies. For services, fixed costs typically include monthly overhead, fixed salaries, and subscriptions. Variable costs include direct labor per client hour, subcontractors, and supply costs per project. The 'selling price' is the service fee per client or project. Divide fixed costs by the contribution margin per engagement to find how many clients or projects are needed to break even.
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