Use our free Break-Even Calculator to calculate how many units you need to sell to cover your costs. Enter your fixed costs, selling price, and variable cost per unit to find your break-even point instantly.
Break-Even Calculator
Calculate break-even units, break-even revenue, and contribution margin.
How to Use the Break-Even Calculator
Enter your fixed costs, selling price per unit, and variable cost per unit. The calculator will show your break-even point, break-even revenue, contribution margin per unit, and contribution margin ratio.
What Is the Break-Even Point?
The break-even point is the level of sales at which total revenue equals total costs. At this point, a business is neither making a profit nor a loss.
Knowing your break-even point can help you understand how many units you need to sell before your business begins generating a profit.
Break-even analysis is also useful when planning business costs and evaluating how much revenue a business needs to cover its expenses. For additional guidance on business costs and break-even analysis, see the U.S. Small Business Administration’s guide to calculating startup costs.
Break-Even Formula
The basic break-even formula is:
Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit
Where:
Contribution Margin per Unit = Selling Price per Unit − Variable Cost per Unit
For example, if fixed costs are $2,700, the selling price is $45 per unit, and the variable cost is $30 per unit:
Contribution Margin = $45 − $30 = $15
Break-Even Units = $2,700 ÷ $15 = 180 units
The business must therefore sell 180 units to reach its break-even point.
How to Calculate Break-Even Revenue
Break-even revenue is the amount of sales revenue required to cover all fixed and variable costs.
Break-Even Revenue = Break-Even Units × Selling Price per Unit
Using the previous example:
180 × $45 = $8,100
The business reaches break-even at $8,100 in sales revenue.
What Is Contribution Margin?
Contribution margin is the amount from each sale that remains after paying the variable cost associated with that unit.
Contribution Margin = Selling Price − Variable Cost
This amount contributes toward covering fixed costs. Once fixed costs have been fully covered, additional contribution margin contributes to profit.
What Is the Contribution Margin Ratio?
The contribution margin ratio expresses contribution margin as a percentage of the selling price.
Contribution Margin Ratio = Contribution Margin ÷ Selling Price × 100
For example, if a product sells for $50 and has a variable cost of $30:
($50 − $30) ÷ $50 × 100 = 40%
The contribution margin ratio is 40%.
Why Does the Calculator Round Break-Even Units Up?
A break-even calculation can produce a fractional number of units. For example, the exact result might be 83.33 units.
If the product can only be sold in whole units, selling 83 units would not fully cover the costs. You would need to sell at least 84 units.
For this reason, our calculator shows both the exact break-even point and the minimum number of whole units required.
Break-Even Calculation Example
Suppose a business has:
Fixed Costs: $10,000
Selling Price per Unit: $80
Variable Cost per Unit: $30
Contribution margin:
$80 − $30 = $50
Break-even point:
$10,000 ÷ $50 = 200 units
Break-even revenue:
200 × $80 = $16,000
The business needs to sell 200 units, generating $16,000 in revenue, to cover its costs.
Frequently Asked Questions
What are fixed costs?
Fixed costs are expenses that generally do not change directly with the number of units sold, such as rent, certain salaries, insurance, or some recurring business expenses.
What are variable costs?
Variable costs are costs associated with producing or selling each additional unit, such as materials, packaging, or per-unit production expenses.
Can the break-even point be zero?
Yes. If fixed costs are zero, the mathematical break-even point is zero units, provided the selling price is greater than the variable cost per unit.
What if the variable cost is higher than the selling price?
There is no conventional break-even point under those assumptions. Each additional unit generates a negative contribution margin rather than helping cover fixed costs.
Is break-even the same as profit?
No. At break-even, revenue covers costs and profit is zero. Sales above the break-even point can generate profit if the underlying costs and prices remain unchanged.