Break-Even Calculator
This break even calculator finds the break even point, the number of units you must sell to cover all costs, from fixed costs, the price per unit, and the variable cost per unit. It also returns break even revenue and the contribution margin, so the break even calculator gives a full break even analysis in one step.
Results
The Break-Even Calculator is part of our Business & Pricing collection. Browse more business & pricing to size, convert, and check your work alongside this tool.
What the break even calculator shows
The break even point is where total revenue equals total costs, so there is neither profit nor loss. Each unit sold contributes its price minus its variable cost toward fixed costs. The break even calculator divides the fixed costs by that contribution to find how many units, and how much revenue, it takes to break even.
Break even point formula
Price minus variable cost is the contribution margin per unit; divided by price, it is the contribution margin ratio. Units are rounded up, since you cannot sell part of a unit.
Break even analysis example
Fixed costs of $20,000, a price of $50, and a variable cost of $30 per unit:
Each unit contributes $20, a 40 percent contribution margin ratio.
How to use the break even point calculator
Enter your fixed costs for the period, the selling price per unit, and the variable cost per unit. The break even point calculator returns the break even units, the break even revenue, the contribution margin per unit, and the contribution margin ratio. Fixed costs are costs that do not change with volume, such as rent and salaries.
Reading the break even point in units and sales
Every unit above the break even point adds its contribution margin as profit; every unit below adds to the loss. Raising the price or cutting variable cost lowers the break even point; adding fixed costs raises it. The margin of safety is how far expected sales sit above break even.
When to find the break even point
- Testing a new product price with the break even calculator
- Planning sales targets for a new business
- Checking how a cost increase changes break even sales
- Preparing a break even analysis for a loan or investor
Common break even calculator mistakes
- Mixing fixed and variable costs. Only costs that change with volume are variable.
- Pricing below variable cost. Break even is then impossible.
- Using yearly fixed costs with monthly sales targets.
Tips for accurate results
- Keep costs and sales on the same time period.
- Recalculate after any price or cost change.
- Plan sales with a margin of safety.
Break even point in sales dollars
When a business sells many products, units are hard to add up, so break even is stated in sales dollars: fixed costs divided by the contribution margin ratio. With $20,000 of fixed costs and a 40 percent ratio, break even sales are $50,000, the same answer as 1,000 units at $50. Running a promotion lowers the price per unit and pushes break even higher, which you can test by entering the sale price from the discount calculator.
Break even analysis for pricing decisions
A break even analysis shows how sensitive profit is to price. Cutting the price from $50 to $40 doubles the units needed, from 1,000 to 2,000, because the contribution per unit halves.
Break even point reference (fixed costs $20,000)
| Price | Variable cost | Break even units | Break even revenue |
|---|---|---|---|
| $40 | $30 | 2,000 | $80,000 |
| $50 | $30 | 1,000 | $50,000 |
| $60 | $30 | 667 | $40,020 |
| $50 | $25 | 800 | $40,000 |
Break-Even Calculator FAQ
What is the break even formula?
Break even units = fixed costs ÷ (price − variable cost per unit).
What is the contribution margin?
Price minus variable cost per unit: the amount each sale contributes to fixed costs and profit.
How do I find break even in sales dollars?
Multiply break even units by price, or divide fixed costs by the contribution margin ratio.
What lowers the break even point?
A higher price, lower variable cost, or lower fixed costs.