Break-Even Point Calculator
Calculate how many units you need to sell and how much revenue you need to cover your fixed and variable costs.
Overview
A break-even point calculator helps you estimate how many units you need to sell before your business covers its fixed costs. Enter your fixed costs, selling price per unit, variable cost per unit, and any target profit to see the sales volume and revenue you need.
How it works
The calculator first finds your contribution margin per unit by subtracting variable cost per unit from selling price per unit. It then divides fixed costs by that contribution margin to estimate the number of units needed to break even. Break-even revenue is calculated using the contribution margin ratio, which shows what portion of each sales dollar contributes toward fixed costs and profit. If you enter a target profit, the calculator adds that profit goal to fixed costs before estimating the required units and revenue.
How to use this calculator
- 1Enter your total fixed costs for the period.
- 2Add your selling price for one unit.
- 3Enter the variable cost for each unit sold.
- 4Set a target profit if you want a profit goal above break-even.
- 5Review the estimated break-even units and break-even revenue.
Example Calculation
Fixed costs
$5,000
Selling price per unit
$50
Variable cost per unit
$20
Target profit
$2,000
Break-even units
166.67 units
With fixed costs of 5000, a selling price of 50, and a variable cost of 20 per unit, the contribution margin is 30 per unit. The business breaks even at about 166.67 units or 8333.33 in revenue. To earn 2000 in profit, it would need to sell about 233.33 units or generate about 11666.67 in revenue.
Frequently asked questions
What is a break-even point?
The break-even point is the level of sales where total revenue equals total costs, so profit is zero.
What are fixed costs?
Fixed costs are expenses that stay the same regardless of how many units you sell, such as rent, insurance, and salaries.
What are variable costs?
Variable costs change with sales volume, such as materials, packaging, shipping, or direct labor per unit.
What is contribution margin?
Contribution margin is the amount left from each sale after variable costs are subtracted. It helps cover fixed costs and then profit.
Why does the calculator show decimals for units?
The raw calculation may produce a decimal, but in practice businesses usually round up to the next whole unit to fully break even.
What if my selling price is lower than my variable cost?
If your selling price is equal to or less than your variable cost, each sale does not contribute enough to cover fixed costs, so a normal break-even point is not achievable.
Explore Related Calculators
Assumptions and warnings
Assumptions
- Fixed costs stay constant over the period being analyzed.
- Selling price per unit and variable cost per unit remain the same for all units sold.
- All units produced are sold within the same period.
- The calculation does not include taxes, financing costs, or changes in demand.
Warnings
- This calculator provides an estimate only and is not financial advice.
- Results may be misleading if your selling price is equal to or lower than your variable cost per unit.