Break-Even Point Calculator

Break-even analysis is built on the relationship between fixed costs, variable costs, sales price, and profit. Fixed costs are expenses that do not change with output within a relevant range, such as rent, salaries for core staff, insurance, and depreciation. Variable costs change with each unit sold, such as materials, direct labor tied to production, or per-transaction fees.

The contribution margin per unit is defined as selling price per unit minus variable cost per unit. It represents how much of each unit's revenue is available to cover fixed costs and then generate profit once fixed costs are fully covered.

The break-even point in units is calculated as total fixed costs divided by contribution margin per unit. This formula is widely cited in accounting and finance texts and professional training materials: Break-even units = Fixed costs ÷ (Selling price per unit − Variable cost per unit).

The break-even point in sales revenue is calculated by multiplying the break-even units by the selling price per unit. An equivalent algebraic form, also used in practice, divides fixed costs by the contribution margin ratio, where contribution margin ratio equals contribution margin per unit divided by selling price per unit.

This calculator assumes a linear cost-volume-profit model: selling price per unit and variable cost per unit remain constant over the range analyzed, fixed costs do not change, and all units produced are sold. These assumptions match the standard cost-volume-profit framework taught in university accounting and finance courses and in small business training materials, but they should be revisited for complex pricing tiers, capacity constraints, or highly volatile input costs.

The break-even point is the sales level where profit is exactly zero and all fixed and variable costs are covered. It is computed from three core inputs: fixed costs, selling price per unit, and variable cost per unit.

By focusing on contribution margin, this calculator helps you translate accounting concepts into concrete sales targets and pricing decisions. It is most reliable when the underlying assumptions of stable prices, stable per-unit variable costs, and a clearly defined product or average unit are reasonably met.

Break-even analysis should complement, not replace, broader financial planning. For important decisions such as launching a new product, expanding capacity, or seeking financing, it is good practice to combine break-even analysis with cash flow projections, sensitivity testing, and professional advice from an accountant or financial advisor.

Suppose your total fixed costs are 50,000, your selling price per unit is 100, and your variable cost per unit is 40. The contribution margin per unit is 60 (100 − 40). Your break-even point in units is 50,000 ÷ 60 ≈ 833.33 units. Because you cannot sell a fraction of a unit, you would typically target at least 834 units to move slightly above break-even.

In the same example, break-even sales revenue is 833.33 units × 100 per unit ≈ 83,333 in revenue. If you plan for 1000 units of sales at the same price and cost structure, the additional 166.67 units above break-even each contribute 60 to profit, so you would expect roughly 10,000 of operating profit before taxes at that volume.

You can use this calculator as a quick scenario tool: adjust fixed costs to see how renting a larger space, hiring additional staff, or investing in equipment shifts your break-even point, or adjust price and variable cost to explore how discounts, supplier changes, or efficiency improvements affect risk and required sales volume.