Break-Even Calculator
Enter your fixed costs, the price per unit and the variable cost per unit, and get the number of units and the revenue at which you stop losing money. Add a target profit to find the volume needed for it, and expected sales to see your margin of safety. The chart plots revenue against total cost. Free, no sign-up.
Your costs and price
Fixed costs stay the same at every volume; price and variable cost per unit are constant. Units and costs refer to the same period — a month, a year or a project.
Results
5,000
Break-even units
$125,000.00
Break-even revenue
$10.00
Contribution margin per unit
40%
Contribution margin ratio
7,000
Units for the target profit
$175,000.00
Revenue for the target profit
At your expected sales
$30,000.00
Profit at expected sales
3,000
Margin of safety (units)
37.5%
Margin of safety (% of sales)
2.667
Degree of operating leverage
The working
Contribution margin = price − variable cost = $25.00 − $15.00 = $10.00
Contribution margin ratio = $10.00 ÷ $25.00 = 40%
Break-even units = fixed costs ÷ margin = $50,000.00 ÷ $10.00 = 5,000
Break-even revenue = 5,000 × $25.00 = $125,000.00
Units for target profit = (fixed costs + target) ÷ margin = ($50,000.00 + $20,000.00) ÷ $10.00 = 7,000
Revenue and cost by volume
Profit by volume
| Units | Revenue | Total cost | Profit |
|---|---|---|---|
| 0 | $0.00 | $50,000.00 | -$50,000.00 |
| 1,000 | $25,000.00 | $65,000.00 | -$40,000.00 |
| 2,000 | $50,000.00 | $80,000.00 | -$30,000.00 |
| 3,000 | $75,000.00 | $95,000.00 | -$20,000.00 |
| 4,000 | $100,000.00 | $110,000.00 | -$10,000.00 |
| 5,000 | $125,000.00 | $125,000.00 | $0.00 |
| 6,000 | $150,000.00 | $140,000.00 | $10,000.00 |
| 7,000 | $175,000.00 | $155,000.00 | $20,000.00 |
| 8,000 | $200,000.00 | $170,000.00 | $30,000.00 |
| 9,000 | $225,000.00 | $185,000.00 | $40,000.00 |
| 10,000 | $250,000.00 | $200,000.00 | $50,000.00 |
How to Use the Break-Even Calculator
- 1. Enter the fixed costs. Costs that stay the same however much you sell in the period: rent, salaries, equipment, insurance.
- 2. Enter the price and the variable cost per unit. Variable cost is what each extra unit costs you — materials, packaging, per-unit fees, sales commission.
- 3. Add a target profit (optional). The calculator then also gives the volume and revenue needed to earn it.
- 4. Add expected sales (optional). You get the profit or loss at that volume, the margin of safety and the degree of operating leverage.
- 5. Read the chart and table. Revenue and total cost are plotted against units sold; they cross at break-even.
The Break-Even Formulas
- Contribution margin per unit = price − variable cost per unit. It is what each unit sold contributes towards covering fixed costs.
- Contribution margin ratio = contribution margin ÷ price.
- Break-even units = fixed costs ÷ contribution margin per unit.
- Break-even revenue = fixed costs ÷ contribution margin ratio, which is the same as break-even units × price.
- Units for a target profit = (fixed costs + target profit) ÷ contribution margin per unit.
Below break-even each unit sold still helps — it reduces the loss by its contribution margin — and above it each unit adds that margin to profit. Because break-even units are usually not a whole number, the calculator reports the whole units you need (rounded up) and shows the exact figure beneath.
Worked Examples
Fixed costs of 50,000, a price of 25 and a variable cost of 15 per unit. The contribution margin is 10 per unit, a ratio of 40%. Break-even units are 50,000 ÷ 10 = 5,000 and break-even revenue is 5,000 × 25 = 125,000. To earn 20,000 of profit you need (50,000 + 20,000) ÷ 10 = 7,000 units, or 175,000 of revenue.
If you expect to sell 8,000 units, the contribution is 80,000 and the profit is 80,000 − 50,000 = 30,000. The margin of safety is 8,000 − 5,000 = 3,000 units, which is 37.5% of expected sales: sales could fall by that share before you make a loss. The degree of operating leverage is 80,000 ÷ 30,000 = 2.667, meaning that a 1% change in sales volume changes operating profit by about 2.67%.
Break-even rarely lands on a whole number. With fixed costs of 18,000, a price of 9.50 and a variable cost of 4.20, the margin is 5.30 and break-even is 18,000 ÷ 5.30 = 3,396.23 units, so you need 3,397 whole units, with revenue of 32,264.15 at the exact figure.
Change one number and see what moves
Raising the price to 28 in the first example lifts the margin to 13 and cuts break-even to 3,846.15 units. Cutting fixed costs by 5,000 lowers it by 500 units. The calculator updates as you type, so you can test each lever on its own.
Assumptions and Limits
- One product. With several products, break-even depends on the sales mix; use the weighted-average contribution margin instead, or run the calculator for each product with its share of fixed costs.
- Linear costs. Price and variable cost per unit are constant and fixed costs do not step up with volume. Real costs often change at capacity limits or with volume discounts.
- Everything sold is produced and sold in the period. There is no inventory build-up or write-off.
- It is a planning aid. It does not account for taxes, financing costs or the time value of money, and it is not business or financial advice. For a project with cash flows over several years, use the NPV and IRR Calculator.
Frequently Asked Questions
- What is the break-even point formula?
- Break-even units = fixed costs ÷ (price per unit − variable cost per unit). Break-even revenue is that number of units multiplied by the price, or fixed costs divided by the contribution margin ratio. With fixed costs of 50,000, a price of 25 and a variable cost of 15, break-even is 5,000 units.
- What is contribution margin?
- The amount each unit sold contributes towards covering fixed costs and then profit: price minus variable cost per unit. As a ratio, it is the contribution margin divided by the price — 40% when a unit sells for 25 and costs 15 to make.
- How do I calculate the sales needed for a target profit?
- Add the target profit to fixed costs and divide by the contribution margin per unit: (50,000 + 20,000) ÷ 10 = 7,000 units. Multiply by the price for the revenue needed. Enter a target profit above and the calculator does this for you.
- What is the margin of safety?
- How far expected sales can fall before you reach break-even, in units or as a share of expected sales: (expected − break-even) ÷ expected. A margin of 37.5% means sales can drop by 37.5% before you start making a loss.
- What is the difference between fixed and variable costs?
- Fixed costs do not change with the number of units sold in the period, such as rent or salaries. Variable costs rise with each unit, such as materials or packaging. Some costs are mixed; for this calculator, split them into a fixed part and a per-unit part.
- Why is there no break-even point for my numbers?
- Because the price is not above the variable cost per unit. Each unit then loses money or adds nothing, so more sales never cover the fixed costs. The price has to rise, or the variable cost has to fall, before a break-even volume exists.