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Break-even Calculator

Break-even is the sales volume where you stop losing money. Enter your fixed costs for the month, the selling price per unit and the variable cost per unit to see how many units you must sell.

It is the fastest sanity check before signing a lease, hiring staff or launching a new product line.

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Display only. Amounts are not converted.

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Rent, salaries, subscriptions: costs that do not change with volume.

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$

Materials, packing, per-order shipping and commissions.

Break-even point

Contribution per unit
$200.00
Contribution margin
40%
Break-even units
600 units
Break-even revenue
$300,000.00
Units are rounded up. You cannot sell part of an order.

At your current price and costs, you need to sell about 600 units ($300,000.00) before this product starts adding profit beyond covering fixed costs.

Smart next steps

Formula

Contribution per unit = Price − Variable cost

Break-even units = Fixed costs ÷ Contribution per unit

Break-even revenue = Break-even units × Price

Contribution margin % = Contribution per unit ÷ Price × 100

If the contribution per unit is zero or negative, no volume can cover fixed costs: the price or the cost has to change.

Worked example

A small bakery has $12,000 of fixed costs a month and sells cakes at $50 that cost $30 each to make.

  • Contribution per cake: $20 (a 40% contribution margin)
  • Break-even units: $12,000 ÷ $20 = 600 cakes
  • Break-even revenue: 600 × $50 = $30,000

The result is the same in any currency: only the symbol changes.

How to use this calculator

  1. 1Enter your fixed costs for the month: rent, salaries, subscriptions, loan repayments.
  2. 2Enter the selling price and the variable cost of one unit.
  3. 3Read the break-even units and revenue you need before you start making a profit.

When businesses use it

  • Deciding whether a second shop or location can cover its own rent.
  • Setting a monthly sales target that keeps the business cash-positive.
  • Testing how many units a price cut would need to make up.

Reading your break-even point

Break-even is the sales level where contribution exactly covers fixed costs. Contribution is what one unit leaves behind after its own variable cost, and fixed costs are everything the business pays whether or not it sells anything: rent, salaries, internet, licence fees, loan interest. Dividing one by the other tells you the volume below which you are funding the business out of your own pocket.

Cost classification decides the answer. Rent and staff salaries are fixed, materials and packing are variable, and electricity is usually a mix. Delivery charges belong with variable costs if they scale with orders. Misclassifying a large semi-fixed cost can move the break-even point by 20% or more, so it is worth splitting the ambiguous items rather than dumping them in one bucket.

Use the number forward, not just backward. Before signing a longer lease, hiring a second employee or launching a product, add the new fixed cost and see the volume it demands. If the required increase in sales looks unrealistic against your last six months, the commitment is too large for the current business.

Ways to bring the break-even point down

  • Raise the price slightly: contribution improves faster than volume falls on most lines.
  • Renegotiate purchase cost or reduce wastage to widen contribution per unit.
  • Convert fixed costs to variable, such as commission-based staff or per-order logistics.
  • Cut fixed costs that do not generate sales before touching those that do.

Fixed vs variable costs

Break-even is only as good as the way you split your costs:

  • Fixed: rent, salaried staff, insurance, software subscriptions, loan interest, your own pay if the business must cover it.
  • Variable (per unit): materials, packaging, per-order shipping, card or marketplace fees, sales commission.
  • Mixed: utilities or a delivery van. Split them into a fixed base and a per-unit part rather than putting all of it in one bucket.

Contribution margin and break-even revenue

If you sell many products at different prices, counting units stops being useful. Work in revenue instead: divide fixed costs by your average contribution margin. In the bakery example, $12,000 ÷ 40% = $30,000 of sales, the same answer without needing a unit count.

Break-even revenue = Fixed costs ÷ Contribution margin ratio

Break-even with a profit target or a price cut

Profit target. Add the profit you want to the fixed costs before dividing. To make $6,000 a month on top of the bakery's costs: ($12,000 + $6,000) ÷ $20 = 900 cakes. You can check it here by entering $18,000 as the fixed costs.

Units for a target profit = (Fixed costs + Target profit) ÷ Contribution per unit

Price cut. Every amount you take off the price comes straight out of contribution. Dropping the cake to $45 cuts contribution to $15 and pushes break-even from 600 to 800 cakes: a 10% price cut needs a third more sales just to stand still. Test an offer with the discount calculator and set the price that gives the margin you need with the profit margin calculator.

For more on reading the result as a pricing decision, see what the break-even point tells you about pricing.

Learn the maths behind it

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Frequently Asked Questions

Rent, salaries, software subscriptions, insurance and loan interest: anything that does not change with the number of units sold.

No. Use prices and costs excluding tax, since tax you collect is passed on to the tax authority and isn't your revenue.

Raise price, cut variable cost, or reduce fixed costs. The tool updates instantly so you can compare options.

Break-even units = fixed costs ÷ (price − variable cost per unit). Multiply that by the price to get break-even revenue. The bracket is your contribution per unit: the amount each sale leaves behind to pay fixed costs.

A thinner margin means less contribution per sale, so you need more units to cover the same fixed costs. If your contribution margin drops from 40% to 20%, break-even volume doubles. Worth checking before you approve a discount.

Use an average contribution margin across your sales mix and compute break-even revenue instead of units.

Yes, if the business must support it. Leaving it out makes the break-even point look lower than it is.

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