Break-Even Calculator
Find the break-even point for your business. Calculate how many units you need to sell to cover your costs.
$10,000 of fixed costs against a $50 price and $20 variable cost needs 334 units to break even, generating $16,700 of revenue at a $30 contribution margin per unit.
Calculator
Enter your values below. Results update instantly.
How This Calculator Works
The break-even point is where total revenue equals total costs:
Break-Even Units = Fixed Costs / (Price - Variable Cost)
The difference between price and variable cost per unit is your contribution margin.
Worked example
Using the defaults — $10,000 fixed cost, a $50 price, and $20 variable cost per unit:
Find the contribution margin. $50 − $20 = $30 per unit. This is what each sale contributes toward fixed costs after the variable cost of making or buying the item.
Divide the fixed costs through. $10,000 ÷ $30 = 333.3 units, which rounds up to 334. You cannot sell a third of a unit, so the break-even is always rounded up.
Translate it into revenue. 334 × $50 = $16,700. Below that revenue figure at this price, the business is losing money; above it, every additional unit adds the full $30 to profit.
See how leverage works after break-even. Selling 400 units produces $2,000 of operating profit — (400 − 334) × $30. Selling 500 produces $5,000. Every unit past the break-even point falls straight to the bottom line, which is why operating leverage cuts both ways when volume drops.
Enter 10000, 50 and 20 above to reproduce the 334-unit figure. The model treats unit variable cost as constant, which fails if you need volume discounts on materials or if overtime raises the labour cost per unit.
Three levers, one break-even point
Each row changes one input from the baseline and shows how far the break-even moves. Price has the largest single effect.
| Scenario | Contribution margin | Break-even units | Break-even revenue | Change |
|---|---|---|---|---|
| Baseline | $30 | 334 | $16,700 | — |
| Price raised to $55 | $35 | 286 | $15,730 | −14% units |
| Variable cost cut to $18 | $32 | 313 | $15,650 | −6% units |
| Fixed costs cut to $8,000 | $30 | 267 | $13,350 | −20% units |
| Price cut to $45 | $25 | 400 | $18,000 | +20% units |
A $5 price rise removes 48 units from the break-even; a $5 price cut adds 66. Cutting fixed costs by 20% has the same proportional effect on units as raising price by 10%, but it is usually far harder to achieve than a small price change.
Common mistakes with this calculation
- Classifying costs by name rather than by behaviour. Rent is fixed. Materials are variable. But a salaried employee who must be added when volume rises is a step cost, and electricity is part fixed, part variable. Misclassifying a variable cost as fixed understates the break-even at low volume and overstates profit at high volume.
- Forgetting that break-even is not profitability. Breaking even means zero profit, not a viable business. The owner needs a salary, the equipment will need replacing, and there is no cushion for a bad month. Target a break-even that leaves a real profit above it, not one you plan to sit on.
- Using an average price when you sell several products. If 80% of volume is the low-margin item, the blended contribution margin is well below the headline product. Calculate a weighted average contribution margin across the actual sales mix, or analyse each line separately.
- Ignoring that raising price reduces volume. The comparison table assumes the price change does not affect demand. In practice a 10% price rise usually loses some customers. If volume falls by more than 14% (from 334 to 286 is a 14% drop), the price rise destroys more profit than it creates.
When this calculator does not apply
- It works on a single product with a single price and a single variable cost. Multi-product businesses need a weighted-average contribution margin.
- It assumes fixed costs are genuinely fixed. In reality they step up as capacity is added.
- It assumes variable cost per unit is constant, which ignores volume discounts, overtime and waste.
- It ignores the time dimension. Break-even in units says nothing about how long it takes to get there, which is where most cash-flow failures actually happen.
- It excludes tax, financing costs and depreciation treatment, so it is a margin analysis rather than a full profit model.
Frequently Asked Questions
What is a contribution margin?
Contribution margin is the amount each unit sale contributes toward covering fixed costs. It is Price minus Variable Cost per unit.
How can I lower my break-even point?
You can: increase price per unit, decrease variable costs, or decrease fixed costs. Each strategy has different implications for your business.
Sources & Methodology
This calculator uses standard financial formulas. See our methodology page for the full formula derivation.
- Business Planning and Financial Projections US Small Business Administration
- Small Business Financial Management US Small Business Administration
- Gross Domestic Product by Industry US Bureau of Economic Analysis
- Producer Price Index US Bureau of Labor Statistics
- Small Business Facts SBA Office of Advocacy
Last reviewed .
Key takeaways
- $10,000 of fixed costs at a $30 contribution margin needs 334 units, or $16,700 of revenue.
- Contribution margin is price minus variable cost per unit, and every sale past break-even adds the full margin to profit.
- Price is the strongest lever: a 10% rise removes 14% of the units needed.
- Break-even is zero profit. A business that only breaks even does not survive.
- Always round break-even units up. You cannot sell a fraction of a unit.