Break-Even Calculator
Formula
Break-Even Units = Fixed Costs ÷ (Price − Variable Cost)
The break-even point is where total revenue equals total costs. Divide fixed costs by the contribution margin (price minus variable cost per unit).
How to use
- Enter your total Fixed Costs.
- Enter the Selling Price per unit.
- Enter the Variable Cost per Unit, then read your break-even point.
Example
With $5,000 fixed costs, a $50 price, and $20 variable cost, you break even after about 167 units (5,000 ÷ 30), or roughly $8,333 in revenue.
Frequently Asked Questions
What are fixed costs?
Costs that don't change with production volume: rent, salaries, insurance, subscriptions.
What are variable costs?
Costs that change per unit: materials, shipping, packaging, commissions.
What is the contribution margin?
The contribution margin is the selling price minus the variable cost per unit, and it represents how much each sale contributes toward covering your fixed costs. For example, a $50 product with $20 in variable costs has a $30 contribution margin, so every unit sold chips $30 off your fixed costs. Once total contribution equals your fixed costs, you've hit break-even and every additional sale becomes profit.
How does break-even help me set a sales target?
Break-even tells you the floor you must clear just to avoid a loss, so it's the starting point for any realistic sales goal. If you want to earn a specific profit, you simply add that profit amount to your fixed costs before dividing by the contribution margin. For instance, with $5,000 in fixed costs, a $30 margin, and a $3,000 profit target, you'd need to sell ($5,000 + $3,000) ÷ $30 ≈ 267 units.