Break-even Calculator

What is a break-even point?

The break-even point is the sales volume where revenue covers both fixed and variable costs. At that point, the business has no profit or loss under the assumptions entered.

It is a practical planning reference for testing a price, sales target, or cost structure. It is not a guarantee of results because actual sales and costs can change.

How to calculate the break-even point

First subtract variable cost per unit from selling price per unit. This gives contribution margin per unit. Divide fixed costs by that amount, then round up to the next whole unit.

Rounding up matters: the displayed whole-unit target must fully cover fixed costs rather than stop just short.

Fixed costs vs variable costs

Fixed costs do not change directly with the number of units sold during the planning period. Examples can include rent, insurance, software subscriptions, and base salaries.

Variable costs grow with sales volume. Materials, unit packaging, production labor paid per item, and per-sale fees may belong here. Keeping the two categories separate makes it clear which costs every sale must help cover.

What is contribution margin?

Contribution margin shows how much the sale of one unit adds toward covering fixed costs and, after fixed costs are covered, profit. A $50 selling price and $30 variable cost produce a $20 contribution margin per unit.

Break-even can be reached only when contribution margin is positive. The contribution margin ratio expresses the same amount as a percentage of selling price.

Break-even point in units vs break-even revenue

Break-even units tells you the minimum whole-unit sales target. Break-even revenue translates that rounded target into sales value by multiplying it by selling price per unit.

This calculator bases revenue on the rounded-up unit count. That keeps the two displayed break-even results consistent and ensures the unit target covers the entered fixed costs.

How to use margin of safety

Margin of safety compares expected unit sales with the rounded break-even point. A positive result shows how many units expected sales can fall before reaching break-even. A negative result shows the estimated shortfall.

Use it to compare scenarios, not as a promise that demand, price, or costs will remain unchanged.

Break-even calculation example

Suppose fixed costs are $50,000, selling price is $50 per unit, variable cost is $30 per unit, and expected sales are 3,000 units.

1. Contribution Margin per Unit: $50 − $30 = $20.
2. Break-even Units: $50,000 ÷ $20 = 2,500 units.
3. Break-even Revenue: 2,500 × $50 = $125,000.
4. Expected Profit at 3,000 units: $10,000.
5. Margin of Safety: 500 units, or 16.67% of expected units sold.

What happens when variable cost is higher than selling price?

When variable cost equals or exceeds selling price, contribution margin is zero or negative. Selling more units then adds nothing toward fixed costs or increases the loss, so no break-even point exists in this model.

The calculator still reports expected revenue, total variable costs, total costs, and expected profit. Break-even and margin of safety results show N/A until selling price is higher than variable cost per unit.

The estimate assumes one constant price and unit cost. It does not model discounts, taxes, step costs, changes in price, or cost changes at different volumes.