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Break-Even Calculator
Find the exact number of units you need to sell and the revenue required to cover all your costs.
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Break-Even Units
Break-Even Revenue
Contribution Margin per Unit
Contribution Margin %
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How to Use This Calculator
Enter your total fixed costs — expenses that don't change with production volume, such as rent, salaries, and insurance. Then enter your selling price per unit and the variable cost per unit (materials, packaging, and other per-unit expenses). Click Calculate to instantly see your break-even point in units and total revenue, along with your contribution margin and contribution margin percentage.
Break-Even Formula
The break-even calculation uses these core formulas: Contribution Margin = Selling Price − Variable Cost per Unit. Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit. Break-Even Revenue = Fixed Costs ÷ (Contribution Margin %). For example, with $10,000 in fixed costs, a $25 selling price, and $15 in variable costs: contribution margin = $10, contribution margin % = 40%, break-even units = 10,000 ÷ 10 = 1,000 units, break-even revenue = 10,000 ÷ 0.40 = $25,000.
Example Calculation
Suppose you run a small business with $10,000 in monthly fixed costs (rent, salaries, utilities). You sell a product for $25 each, and it costs $15 per unit in variable costs (materials and packaging). Your contribution margin is $10 per unit, or 40%. To break even, you need to sell 1,000 units — generating $25,000 in revenue. Every unit sold beyond 1,000 contributes $10 directly to profit. If you can reduce fixed costs to $8,000 or raise your price to $27, the break-even point drops significantly.
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Frequently Asked Questions
What is a break-even point?
The break-even point is the level of sales at which total revenue equals total costs — meaning the business neither makes a profit nor incurs a loss. It's calculated by dividing total fixed costs by the contribution margin per unit (selling price minus variable cost per unit). Knowing your break-even point is fundamental to pricing strategy and financial planning.
What is contribution margin?
Contribution margin is the amount each unit sold contributes toward covering fixed costs and generating profit. It's calculated as selling price per unit minus variable cost per unit. For example, if you sell a product for $25 and it costs $15 in variable costs to produce, your contribution margin is $10 per unit. The contribution margin ratio expresses this as a percentage of the selling price.
How do fixed vs variable costs affect the break-even point?
Fixed costs (rent, salaries, insurance) don't change with production volume — the higher your fixed costs, the more units you need to sell to break even. Variable costs (materials, packaging, commissions) scale with each unit sold — higher variable costs reduce your contribution margin and raise the break-even point. Lowering either type of cost directly lowers your break-even threshold.
How do I use break-even analysis for pricing?
Break-even analysis helps you set prices strategically. If your current price barely covers variable costs, you'll never break even regardless of volume. Increase the price to raise the contribution margin, which lowers the break-even point. You can also use the analysis in reverse: decide on a target sales volume, then work backward to find the minimum price needed to cover fixed costs at that volume.
What is a break-even chart?
A break-even chart is a visual graph that plots total revenue and total costs against units sold. The point where the two lines intersect is the break-even point. Below that intersection, the business is losing money (costs exceed revenue). Above it, the business is profitable. Break-even charts are useful for presenting financial projections to stakeholders and for understanding the margin of safety between actual sales and the break-even level.
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