Break-Even Calculator
Calculate break-even units, break-even revenue, contribution margin, and estimated profit or loss from your fixed costs, selling price, and variable cost.
Break-Even Results
This calculator uses a simple unit break-even model. Actual results may differ if your business has multiple products, changing prices, discounts, taxes, shipping costs, commissions, capacity limits, refunds, or variable costs that change with volume.
Use this Break-Even Calculator to estimate how many units you need to sell to cover fixed and variable costs. It can also calculate break-even revenue, contribution margin, target-profit sales, and estimated profit or loss.
Break-Even Calculation Method
First calculate contribution margin per unit:
Contribution margin = selling price per unit − variable cost per unit
Then calculate the break-even point:
Break-even units = fixed costs ÷ contribution margin per unit
Break-even revenue = break-even units × selling price per unit
The contribution margin ratio is:
Contribution margin ratio = contribution margin ÷ selling price × 100
For a target profit:
Target-profit units = (fixed costs + target profit) ÷ contribution margin
If expected sales are entered:
Estimated profit or loss = (expected units × contribution margin) − fixed costs
Example
Suppose a product sells for $50 per unit, variable cost is $30 per unit, and fixed costs are $4,000.
Contribution margin = $50 − $30 = $20 per unit
Break-even units = $4,000 ÷ $20 = 200 units
Break-even revenue = 200 × $50 = $10,000
If the business wants a $1,000 profit:
Target-profit units = ($4,000 + $1,000) ÷ $20 = 250 units
The business must therefore sell approximately 200 units to break even and 250 units to earn a $1,000 profit, assuming costs and selling price remain unchanged.
Important Notes
- Use fixed costs and variable costs from the same time period.
- The selling price must be greater than the variable cost per unit for a positive contribution margin.
- The calculation assumes a constant selling price, variable cost per unit, and fixed-cost level.
- Discounts, refunds, taxes, commissions, shipping, capacity limits, and changing supplier costs can affect the actual break-even point.
- Businesses selling several products with different margins require a more detailed multi-product break-even analysis.
- Break-even analysis is a planning estimate and does not guarantee profitability or future sales.