Break-Even Calculator
Enter your fixed costs for the period, the price you sell each unit for and what each unit costs to make. The calculator shows the sales needed to cover all costs.
Break-Even Units
500
Break-Even Revenue
$25,000.00
Contribution Margin per Unit
$20.00
Contribution Margin Ratio
40%
How it works
Every unit you sell contributes its price minus its variable cost towards paying your fixed costs. That amount is the contribution margin. Once enough units have been sold to cover the fixed costs entirely, you break even; every unit after that is profit.
The break-even point in units is the fixed costs divided by the contribution margin per unit. Because you cannot sell a fraction of a unit, the calculator rounds that figure up to the next whole unit.
The contribution margin ratio is the contribution margin as a share of the price. Dividing fixed costs by that ratio gives the break-even point in revenue, which is useful when you sell many different products and think in dollars rather than units.
Formula
contribution margin per unit = price − variable cost contribution margin ratio = contribution margin ÷ price break-even units = ceil(fixed costs ÷ contribution margin) break-even revenue = fixed costs ÷ contribution margin ratio
Example
A business with $10,000 of fixed costs per month sells a product for $50 that costs $30 to make. Each unit contributes $20.00, a contribution margin ratio of 40%. It must sell $10,000 ÷ $20 = 500 units, or earn $25,000.00 in revenue, to break even.
If the price drops to $45, the contribution margin falls to $15 and the exact break-even point is 666.67 units. The calculator reports 667 units, since the 667th sale is the first that covers all costs, and a break-even revenue of $30,000.00 (the exact 666.67 units × $45).
Assumptions and limitations
- Price and variable cost per unit are constant: no volume discounts, no bulk purchasing savings and no price changes within the period.
- Fixed costs are constant across the whole period and do not step up as volume grows.
- Everything produced is sold; inventory and timing of cash are ignored.
- Break-even units are rounded up to a whole unit, but break-even revenue uses the exact, unrounded units, so revenue can be slightly less than rounded units × price.
- A single product, or a stable product mix, is assumed. Taxes and financing costs are not modelled unless included in fixed costs.
- Results are for informational and educational purposes and are not financial, tax or accounting advice.
Frequently asked questions
What happens if the price is below the variable cost?
Every sale loses money, so there is no break-even point: selling more only increases the loss. The calculator asks you to enter a price above the variable cost per unit.
Why is break-even revenue not exactly units times price?
Units are rounded up to a whole number because you cannot sell part of a unit. Revenue is reported from the exact break-even point (fixed costs divided by the contribution margin ratio), which is the figure accountants quote. The two agree exactly whenever the unit figure comes out whole.
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