About the Break-Even Calculator
This break-even calculator shows the exact point where your sales cover all of your costs. Enter your fixed costs for a period (rent, salaries, software, insurance), the price you charge per unit and the variable cost of making or delivering each unit. It returns the number of units you must sell, the matching sales revenue, and your contribution margin per unit.
It is useful for founders testing a business idea, product managers setting a price, restaurant and retail owners planning a month, and anyone writing a business plan or loan application. Add a profit target to see how many extra units you need to earn it, and enter your expected sales to see your margin of safety — how far sales can fall before you start losing money.
The model assumes a constant price and constant variable cost per unit and that fixed costs do not change within the range of sales you are modelling. Keep all figures in the same period (for example, monthly fixed costs with monthly unit sales).
With the default inputs, the break-even units is 334. Change any value above to recalculate instantly.
How to use the break-even calculator
- 1Add up your fixed costs for one period, such as a month.
- 2Enter the price you charge for one unit or one sale.
- 3Enter the variable cost of each unit, including materials, fees and shipping.
- 4Optionally add a profit target and your expected sales volume.
- 5Read the break-even units and revenue, then check the chart to see where the lines cross.
Formula and method
Every unit you sell brings in its price P but costs V to produce, so it contributes P − V (the contribution margin) toward covering fixed costs F. Dividing fixed costs by the contribution margin gives the number of units at which total contribution exactly equals fixed costs; the calculator rounds this up because you cannot sell part of a unit.
Break-even revenue divides fixed costs by the contribution margin ratio ((P − V) ÷ P). Units for a target profit use (F + target) ÷ (P − V). Margin of safety is (expected units − break-even units) ÷ expected units, the share of expected sales you could lose before making a loss.
- F
- Total fixed costs for the period
- P
- Selling price per unit
- V
- Variable cost per unit
- P − V
- Contribution margin per unit
Worked examples
Product selling at $50 with $10,000 monthly overhead
Each $50 sale costs $20 to produce, leaving $30 of contribution. $10,000 ÷ $30 = 333.3, so you need 334 units (about $16,667 in sales) to break even. Selling 500 units gives a 33.3% margin of safety and $5,000 profit.
Coffee cart with a $2,000 profit goal
A $4.50 coffee with $1.35 of ingredients and cup contributes $3.15. Covering $4,500 of monthly costs takes 1,429 cups, or $6,428.57 of sales. Earning $2,000 profit on top requires (4,500 + 2,000) ÷ 3.15 = 2,064 cups.
Manufacturer with $250,000 fixed costs
At $120 per unit and $45 variable cost, each unit contributes $75 (a 62.5% ratio). $250,000 ÷ $75 = 3,333.3 units, so the break-even revenue is $400,000. Selling 4,000 units produces $50,000 of profit.
Frequently asked questions
What is a break-even point?+
It is the sales level at which total revenue equals total costs, so profit is exactly zero. Below it you make a loss; every unit sold above it adds its contribution margin to profit.
How do I lower my break-even point?+
Raise your price, cut the variable cost per unit (cheaper suppliers, lower fees), or reduce fixed costs. A higher price usually has the biggest effect, but test it against demand because fewer customers may buy.
What counts as a fixed cost versus a variable cost?+
Fixed costs stay the same regardless of volume within a period — rent, salaries, insurance, subscriptions, loan payments. Variable costs rise with each sale — raw materials, packaging, shipping, card processing fees and per-sale commissions.
What is the contribution margin ratio?+
It is the share of each sales dollar left after variable costs, (price − variable cost) ÷ price. A 60% ratio means 60 cents of every dollar of sales goes toward fixed costs and then profit.
Can I use the break-even calculator for a service business?+
Yes. Treat one billable hour, project or client as the unit, use your rate as the price, and include direct costs such as subcontractors or materials as the variable cost.
What is the margin of safety?+
It is the percentage by which expected sales exceed break-even sales. A 25% margin of safety means sales could drop by a quarter before the business starts losing money.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.