Break Even Calculator

Break-even depends on contribution far more than on price. What matters is how much of each sale is left over after the cost of making that sale, and how many of those leftovers you need to cover the costs you pay whether you sell anything or not.

A worked case

Fixed costs of 48,000 for the year, a variable cost of 11.00 per unit, a selling price of 29.00.

• Contribution margin per unit: 18.00
• Contribution margin ratio: 62.07%
• Break-even volume: 2,667 units
• Break-even revenue: 77,343.00

Contribution per unit = price − variable cost
Break-even units      = fixed costs ÷ contribution per unit

The exact division gives 2,666.67. The tool rounds up, because 2,666 units leaves 12.00 of fixed cost uncovered and you can't sell two thirds of a unit. Unit 2,668 is the first one that makes a profit.

The lever that moves fastest

Raise the price by one unit of currency and contribution goes from 18.00 to 19.00. Break-even falls to 2,527 units, so a 3.4% price rise cuts the volume you need by 5%. Cutting the variable cost by the same amount has an identical effect, since contribution is all the formula sees.

Trimming fixed costs is more linear: knock 10% off the 48,000 and the break-even volume falls by exactly 10%. Which lever you can actually pull is a business question, but on the arithmetic alone, price and unit cost move the answer fastest.

If the selling price doesn't exceed the variable cost, there's no break-even at all, because every extra unit widens the loss. The tool refuses that input instead of returning a number.

Getting the two cost buckets right

In practice, break-even models mostly fail because a cost ended up in the wrong bucket.

Fixed costs don't move with volume over the period: rent, permanent salaries, insurance, software subscriptions, loan interest, depreciation. Use the total for the same period as your sales figure, so annual fixed costs with an annual volume and monthly with monthly. Mixing the two is the most frequent mistake people make on this page.

Variable costs move with each unit: materials, direct labour where it genuinely scales, packaging, per-unit shipping, payment processing fees, sales commission.

Semi-variable costs, like a utility bill with a standing charge or a salesperson on base plus commission, need splitting between the two. If you put the whole of one in the wrong bucket, the answer shifts materially.

Where the model is thin

• Constant price at every volume. Selling 2,667 units almost certainly involves discounts, distributor terms and bulk pricing that a single price input can't represent.
• Constant unit cost. Supplier pricing usually improves with quantity, which makes the real break-even slightly lower than modelled.
• Everything produced is sold. The model assumes there's no unsold stock, and no returns or write-offs.
• One product. A multi-product business breaks even on a weighted average contribution margin, and the mix changes the answer.
• Gross, not net. Corporation tax and any fixed cost you forgot push the true threshold higher.

Treat the number as a floor to beat, not a target to hit.

Elsewhere on the site

If you want the contribution margin as a percentage before you start, the profit margin calculator gives you that. To set a price from cost in the first place, use the markup calculator. And to check whether the fixed investment behind those costs paid off, try the ROI calculator.