Break-Even Point Calculator
Find exactly how many units you must sell to cover all costs — and hit a profit target. Essential for pricing decisions, startup planning, and evaluating new product lines.
About this calculator
The break-even point tells you the minimum sales volume needed so that total revenue equals total costs, producing zero profit or loss. The key concept is the contribution margin per unit, which is the selling price minus the variable cost per unit. This represents how much each sale contributes toward covering fixed costs. The formula is: Break-Even Units = (Fixed Costs + Target Profit) / (Selling Price − Variable Cost per Unit). When target profit is set to $0, you get the pure break-even volume. Setting a target profit above zero lets you plan for a desired margin. If the selling price equals the variable cost, the contribution margin is zero and the break-even point is undefined — no volume of sales can ever cover fixed costs.
How to use
Suppose your business has fixed costs of $10,000/month, a selling price of $50/unit, and a variable cost of $30/unit, and you want to earn $2,000 profit. Step 1 — Calculate contribution margin: $50 − $30 = $20/unit. Step 2 — Apply the formula: ($10,000 + $2,000) / $20 = $12,000 / $20 = 600 units. You must sell 600 units per month to cover all costs and hit your $2,000 profit target. Multiply by selling price to get required revenue: 600 × $50 = $30,000/month.
Frequently asked questions
What is the difference between break-even point in units and break-even point in revenue?
Break-even in units tells you how many items you need to sell, while break-even in revenue converts that to a dollar sales target. To get revenue, multiply the break-even unit figure by the selling price per unit. Both measures are useful — units help with production planning, while revenue figures align with sales targets and financial statements.
How does a lower variable cost affect the break-even point?
Lowering your variable cost per unit increases the contribution margin, meaning each sale covers more of your fixed costs. A higher contribution margin reduces the number of units you need to sell to break even. For example, cutting variable cost from $30 to $25 on a $50 product raises the margin from $20 to $25, reducing break-even units by 20%. This is why cost-reduction strategies can be just as powerful as price increases.
When should a business recalculate its break-even point?
You should recalculate break-even whenever there is a significant change in costs, pricing, or business structure. Common triggers include rent increases, new equipment purchases, supplier price changes, or a planned price adjustment. Businesses launching new product lines should always run a break-even analysis before committing capital. Regular quarterly reviews ensure your pricing strategy stays aligned with your actual cost structure.