Break-even calculator
Find the sales volume that covers entered costs.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
How it works
Break-even occurs when contribution from sales covers fixed costs. The calculator divides fixed costs by contribution per unit, keeps the theoretical unit count, rounds the required units up to a whole unit, and reports revenue at that whole-unit count.
Contribution per unit = price − variable cost; theoretical units = fixed costs ÷ contribution per unit; whole units needed = ceiling(theoretical units); break-even revenue at whole units = whole units needed × price.
This is a single-product or blended-average scenario. It does not forecast demand, account for capacity, or replace accounting and business planning.
Assumptions
- Price and variable cost are measured per unit.
- Fixed costs are for the same period as expected sales.
- Price must exceed variable cost for a finite positive break-even point.
- The mix of products, taxes, financing, and demand changes are excluded.
Worked example
$10 price and $6 variable cost
With $2,000 fixed costs, contribution is $4 per unit and break-even is $2,000 ÷ $4 = 500 units, or $5,000 of sales.
Step by step
- Find the contribution per unit. $10 price − $6 variable cost = $4 per unit left to cover fixed costs. As a share of price that is 40%, the contribution margin ratio.
- Divide fixed costs by contribution. $2,000 ÷ $4 = 500 units, the theoretical break-even.
- Round up to whole units. 500 is already a whole number, so break-even units needed is 500. A fractional result would be rounded up, because one unit short of break-even leaves part of the fixed costs uncovered: 499 units cover $1,996 of the $2,000.
- Convert units to revenue. 500 × $10 = $5,000 of sales. The same figure comes from fixed costs ÷ contribution margin ratio: $2,000 ÷ 0.40 = $5,000.
- Confirm profit is zero. At 500 units, revenue of $5,000 − variable costs of 500 × $6 = $3,000 − fixed costs of $2,000 = $0. Each unit sold after that adds $4 of profit.
How to read your result
The headline, Break-even units needed, is the smallest whole number of units that covers fixed costs. The secondary results show the unrounded theoretical units, the contribution per unit, and revenue at the whole-unit count, and the table repeats them with their units.
Rounding up can make break-even revenue a little higher than fixed costs ÷ contribution ratio. With a $7 variable cost, contribution falls to $3 and the theoretical result is 666.67 units; the calculator reports 667 units and $6,670 of revenue rather than $6,666.67.
Fixed costs set the period. If $2,000 is a month of rent and salaries, 500 is units per month. The model keeps price and variable cost constant at every volume and leaves out taxes, financing costs, volume discounts, capacity limits, and fixed costs that step up as output grows. It shows the volume required, not whether that volume can be sold.
What changes the result most
- Price
- A $11 price instead of $10 raises contribution to $5 and lowers break-even to 400 units, or $4,400 of sales. A 10% price increase cuts the required volume by 20% here, because the whole increase goes to contribution.
- Variable cost
- A $7 variable cost instead of $6 cuts contribution to $3. Break-even rises to 666.67 theoretical units, 667 whole units, and $6,670 of sales.
- Fixed costs
- Break-even moves in proportion to fixed costs. At $2,500 it is 625 units and $6,250 of sales: each extra $4 of fixed cost adds one unit.
Questions
What if variable cost equals price?
There is no positive contribution to cover fixed costs, so a finite break-even point cannot be calculated.
Can I use multiple products?
Use a weighted average price and variable cost only when that mix is a defensible assumption. The simple model is clearest for one product or service.
Does break-even mean the business is profitable?
No. Break-even means modeled revenue and costs are equal. Profit requires sales above that point under the same assumptions.
How do you calculate break-even in sales dollars?
Divide fixed costs by the contribution margin ratio, (price − variable cost) ÷ price. In the example, $2,000 ÷ 0.40 = $5,000. The calculator reports revenue at the whole-unit count, which can be slightly higher when units are rounded up.
What is contribution margin?
Price minus variable cost per unit: the part of each sale available to cover fixed costs and, past break-even, to become profit. In total it is revenue minus all variable costs, and as a ratio it is contribution ÷ price. It is not the same as gross margin, which subtracts cost of goods sold and can include some fixed production costs.
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Sources
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.