How to use the break-even calculator
Enter total fixed costs for the period you are analyzing, the selling price per unit, and the variable cost for one unit. The calculator estimates the number of whole units you need to sell to cover those costs and the corresponding sales revenue.
Break-even point formula
Break-even units = Fixed costs ÷ (Selling price per unit − Variable cost per unit)
Selling price minus variable cost is the contribution per unit. Each sale contributes this amount toward covering fixed costs. Once total contribution equals fixed costs, the business reaches its operating break-even point.
Example: calculate break-even sales
Suppose fixed costs are $5,000, the selling price is $50 per unit, and variable cost is $30 per unit. Each unit contributes $20 toward fixed costs. Dividing $5,000 by $20 gives 250 units, so the estimated break-even volume is 250 units and break-even revenue is $12,500.
Understand contribution margin
Contribution margin per unit is the amount remaining after variable cost. Contribution margin ratio expresses that amount as a percentage of selling price. A higher contribution per unit generally lowers the number of units required to break even, assuming fixed costs stay the same.
Assumptions and limitations
This is a simplified estimate. It assumes fixed costs remain fixed and variable cost per unit and selling price remain constant across the sales range. It does not model multiple products, changing discounts, capacity limits, taxes, or step-cost increases. Make sure your fixed costs and variable costs cover the same time period.
Frequently asked questions
What happens if selling price is equal to variable cost?
There is no contribution left to cover fixed costs, so the business cannot reach break-even through additional unit sales at that price.
Does break-even mean the business is profitable?
No. Break-even means the modeled revenue covers the modeled costs. Profit begins above that point, assuming the inputs and assumptions remain valid.
Related calculators
- Profit Margin Calculator – calculate gross profit margin.
- Ecommerce Profit Calculator – estimate profit after common order costs.
- Markup Calculator – set a selling price from cost and markup.