Break-even point calculator
Find how many units you must sell to cover your costs.
Fill in the fields and the result will appear here automatically.
This break-even calculator shows the sales volume that covers fixed and variable costs. Fixed costs stay the same whatever you sell — rent, salaries, subscriptions. Variable costs grow with every unit sold — materials, commission, delivery. The gap between price and variable cost is the contribution margin, and it is what pays down the fixed costs. Add a planned sales volume to also see the profit and the margin of safety.
How it works
Formula and logic
The contribution margin per unit is the price minus the variable cost per unit. Every unit sold contributes exactly that amount towards the fixed costs, so the break-even volume is the fixed costs divided by the contribution margin. Goods are sold in whole units, so the calculated volume is rounded up. Break-even revenue is shown as two separate figures — at the exact calculated volume and at the whole number of units — because they are different amounts and the calculator does not mix them. The formulas assume one cost basis and constant price and variable cost per unit within the relevant range. If both fixed costs and contribution are zero, profit is zero at every volume. With negative contribution and zero fixed costs, only zero sales give zero profit. The plan is a non-negative whole count; a blank field means 0.
Example
Fixed costs of 300,000 a month, a price of 1,500 and a variable cost of 900 give a contribution margin of 600 per unit, so 500 units and 750,000 in revenue are needed to break even.
Fields and units
- Fixed costs per period — $
- Selling price per unit — $
- Variable cost per unit — $
- Planned sales volume — unitless. A non-negative whole number. Blank or 0 hides the planned-sales rows; fractional units are not rounded.
How to use
- — Enter the fixed costs for the period: rent, salaries, subscriptions and anything else that does not depend on sales volume.
- — Enter the selling price of one unit of your product or service.
- — Enter the variable cost per unit — what each sold item costs you.
- — Optionally add a planned sales volume to see the profit and the margin of safety.
Method and limitations
- Calculation method
- Formula and logic
- Data or methodology source
- OpenStax, Managerial Accounting: break-even and relevant-range cost assumptions
- Limitation
- One constant price, one variable cost per unit, and fixed costs for the same period within the relevant volume range. Capacity changes, discounts, product mix and tax rules can change the actual break-even point; this is not a guaranteed sales plan.
FAQ
What is the difference between fixed and variable costs?
Fixed costs do not depend on how much you sell in a period: rent, salaries, subscriptions, depreciation. Variable costs arise with every unit sold: materials, packaging, marketplace commission, delivery. A single spending line is sometimes split between the two, and then it has to be shared across both fields.
What is the contribution margin and why does it matter?
It is the selling price minus the variable cost per unit. It shows how much each sold unit contributes towards the fixed costs. While the accumulated contribution is below the fixed costs the business runs at a loss, and the moment they are equal is the break-even point.
Why are two different revenue figures shown?
Revenue at the calculated volume divides the fixed costs by the contribution margin ratio and corresponds to a fractional number of units. Revenue at the whole number of units multiplies the rounded-up volume by the price. The second figure is usually slightly larger, and the two must not be confused.
Why is the volume rounded up rather than to the nearest unit?
You cannot sell part of a unit, and one unit fewer than the calculated volume no longer covers the fixed costs. So the result is rounded up. When the calculated volume is already a whole number, no extra unit is added.
What does the margin of safety mean?
It is the gap between the planned sales volume and the break-even point. As a percentage it shows how far the plan can fall before the business stops covering its costs. A negative margin of safety means the planned volume is below break-even and the calculation shows a loss.
What if the variable cost is higher than the price?
With positive fixed costs, zero contribution leaves a constant loss and negative contribution increases the loss per unit. If fixed costs are zero, zero contribution gives zero profit at every volume; with negative contribution, only zero volume avoids a loss.
Are taxes and loans included?
No. The calculation uses the amounts you enter and does not model taxes, loan interest or seasonality. It is a management estimate rather than an accounting or tax calculation, so the result is not a guarantee of profit.