Break-Even Point Calculator
Find the exact number of units you must sell to cover all costs and start making profit. Essential for pricing decisions, business planning, and evaluating new product launches.
About this calculator
The break-even point tells you how many units must be sold before your revenue equals your total costs — the point where profit is exactly zero. The core formula is: Break-Even Units = (Fixed Costs × Time Frame) / (Selling Price − Variable Cost per Unit). Fixed costs are expenses that don't change with output (rent, salaries, software subscriptions). Variable costs change with each unit produced or sold (materials, packaging, shipping). The denominator — Selling Price minus Variable Cost — is called the contribution margin per unit: how much each sale contributes toward covering fixed costs. If the selling price equals the variable cost, the contribution margin is zero and break-even is mathematically impossible (division by zero), meaning no volume of sales can ever cover fixed costs.
How to use
Suppose your fixed costs are $5,000/month, your selling price is $40/unit, and your variable cost is $15/unit. Set the time frame to 1 month. Contribution margin = $40 − $15 = $25. Break-Even Units = ($5,000 × 1) / $25 = 200 units. This means you need to sell 200 units in that month before you earn any profit. Selling 201 units generates your first $25 of profit. Adjust the selling price or reduce variable costs to lower the break-even threshold.
Frequently asked questions
What is the difference between fixed costs and variable costs in break-even analysis?
Fixed costs remain constant regardless of how many units you produce or sell — examples include rent, insurance, and annual software licenses. Variable costs scale directly with output; every additional unit adds the same incremental cost for materials, labor, or shipping. In break-even analysis, only the difference between selling price and variable cost (the contribution margin) offsets fixed costs. Correctly categorizing each expense ensures your break-even calculation is accurate and actionable.
How does changing the selling price affect the break-even point?
Raising the selling price increases the contribution margin per unit, so fewer units are needed to cover fixed costs and break even sooner. Lowering the price shrinks the contribution margin, pushing the break-even point higher and increasing risk. For example, raising the price from $40 to $50 (with a $15 variable cost) lifts the contribution margin from $25 to $35, cutting the break-even units by 30%. Price changes have a leveraged effect on profitability compared with equivalent cost reductions.
When should I use a break-even calculator for a new product launch?
Before launching any product, a break-even analysis helps you set a minimum viable sales target and validate whether your pricing covers costs. It is especially critical when committing to large upfront investments in inventory, tooling, or marketing. If the calculated break-even volume exceeds realistic market demand, you can adjust pricing, reduce costs, or reconsider the launch entirely. Running the analysis with pessimistic, realistic, and optimistic scenarios gives you a range of outcomes to plan around.