Break-Even Calculator

Break-even analysis is one of the most fundamental tools in business planning and financial decision-making. It answers a simple but critical question: how many units do you need to sell before your revenue covers all of your costs? Until you reach that break-even point, every sale contributes to covering your fixed costs. After you pass it, each additional sale generates pure profit.

The break-even calculation relies on three inputs: your total fixed costs, the variable cost per unit, and the selling price per unit. Fixed costs are expenses that remain constant regardless of how many units you sell, such as rent, salaries, insurance, and equipment leases. Variable costs change with each unit produced, including materials, packaging, shipping, and sales commissions.

The difference between the selling price and the variable cost per unit is called the contribution margin. This is the amount each unit sale contributes toward covering your fixed costs. The break-even point in units is simply your total fixed costs divided by the contribution margin per unit. Multiply that by the selling price to get the break-even revenue.

Break-even analysis is used by startups evaluating whether a product idea is viable, by established businesses assessing the impact of price changes, and by managers deciding whether to invest in new equipment that increases fixed costs but reduces variable costs. It is also essential for setting sales targets and understanding the financial risk of a new venture.

This calculator computes your break-even point in units, the revenue needed to break even, and the contribution margin per unit. If your selling price is less than or equal to the variable cost, the tool will alert you that break-even is not achievable at that price point.