Break-Even Point Calculator
Determine how many units your business must sell to cover all costs and start making a profit. Essential for pricing decisions and startup planning.
About this calculator
The break-even point is the sales volume at which total revenue exactly equals total costs — no profit, no loss. It is calculated using the formula: Break-Even Units = Fixed Costs / (Price per Unit − Variable Cost per Unit). The denominator, Price per Unit − Variable Cost per Unit, is called the contribution margin per unit — the amount each sale contributes toward covering fixed costs. For example, if fixed costs are $10,000, price is $50, and variable cost is $30, the contribution margin is $20 and break-even is 10,000 / 20 = 500 units. If the price does not exceed the variable cost per unit, the contribution margin is zero or negative, making break-even impossible — the calculator returns N/A in that case. This analysis is fundamental to pricing strategy, budgeting, and evaluating business viability.
How to use
Imagine you run a candle business with $4,500 in monthly fixed costs (rent, equipment, salaries). Each candle sells for $25, and the materials and packaging cost $10 per candle. Enter $4,500 as Fixed Costs, $25 as Price per Unit, and $10 as Variable Cost per Unit. Contribution margin = $25 − $10 = $15. Break-even = $4,500 / $15 = 300 units. You must sell 300 candles per month to cover all costs. Every candle sold beyond 300 generates $15 in pure profit.
Frequently asked questions
How do I calculate the break-even point for my small business?
Divide your total fixed costs by the contribution margin per unit, which is your selling price minus the variable cost per unit. Fixed costs are expenses that do not change with production volume — rent, salaries, insurance. Variable costs change with each unit produced — materials, packaging, direct labor. Once you know your break-even quantity, you can set realistic sales targets and evaluate whether your pricing and cost structure are sustainable. Revisit the calculation whenever your costs or pricing change significantly.
What happens if my price per unit is lower than my variable cost per unit?
If your price is at or below your variable cost, every unit you sell increases your loss rather than covering fixed costs. In this scenario, the contribution margin is zero or negative, which means there is no volume at which the business breaks even. This calculator returns N/A in that case to flag the problem. The solution is either to raise your price, reduce variable costs through supplier negotiation or process improvement, or reconsider the product's viability entirely. Operating with a negative contribution margin is unsustainable regardless of sales volume.
How can I use the break-even point to make better pricing decisions?
Knowing your break-even volume gives you a concrete sales floor — a minimum target below which the business loses money. You can work backward from a realistic maximum sales forecast to determine the minimum price that makes the business viable. For instance, if you can only sell 200 units per month, your price must be set so that 200 units × contribution margin ≥ fixed costs. The break-even analysis also reveals the impact of discounting: every dollar reduction in price increases the number of units you must sell to break even, often dramatically. Running multiple scenarios with different price points and cost structures is a powerful way to stress-test a business model.