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Break-Even Calculator

Calculate the break-even point for your business based on costs and pricing.

Inputs

$
$
$

Results

Break-Even Point (Units)
400
Break-Even Revenue
$20,000
Contribution Margin
$25 (50.0%)

Disclaimer: This calculator provides estimates for informational purposes only. Results are not financial advice. Consult a qualified financial advisor for decisions about your specific situation. Actual rates, terms, and conditions may vary by lender and individual circumstances.

How Does the Break-Even Calculator Work?

Break-even analysis determines the exact point where your total revenue equals your total costs, meaning your business neither makes a profit nor incurs a loss. The calculation divides your fixed costs by the contribution margin per unit, which is the selling price minus the variable cost per unit. Fixed costs are expenses that remain constant regardless of production volume, such as rent, salaries, insurance premiums, and equipment leases. Variable costs change in proportion to the number of units produced, including raw materials, direct labor, packaging, and shipping. Understanding where these two cost lines intersect with your revenue line is fundamental to sound business planning. Every unit sold above the break-even point generates pure profit equal to the contribution margin, while every unit below represents a loss that must be covered by other means.

Formula: Break-Even Units = Fixed Costs / (Price Per Unit - Variable Cost Per Unit)

How to Use This Calculator

Start by entering your total monthly fixed costs. These are expenses you pay regardless of how many units you sell, including rent, salaries, insurance, software subscriptions, and loan payments. Next, enter the variable cost per unit, which covers materials, packaging, shipping, and any per-item production costs. Finally, enter your selling price per unit. The calculator instantly shows how many units you need to sell each month to cover all costs, along with the break-even revenue figure. Try adjusting the price or costs to see how changes affect your break-even point. This is especially useful when evaluating new pricing strategies or considering whether to invest in equipment that increases fixed costs but reduces variable costs.

Example Calculation

Sarah runs a handmade candle business from home. She pays $2,000/month in fixed costs (rent, insurance, website, tools). Each candle costs $8 to produce (wax, wick, fragrance, packaging) and sells for $25.

  1. 1Fixed costs = $2,000 per month
  2. 2Variable cost per unit = $8 per candle
  3. 3Selling price per unit = $25 per candle
  4. 4Contribution margin = $25 - $8 = $17 per candle
  5. 5Break-even units = $2,000 / $17 = 117.6, rounded up to 118 candles
  6. 6Break-even revenue = 118 x $25 = $2,950 per month
Result: Sarah needs to sell at least 118 candles per month ($2,950 in revenue) to cover all costs. Every candle sold beyond 118 generates $17 in profit.

Understanding Your Results

The break-even point in units tells you the minimum number of products you must sell to avoid losing money. The break-even revenue is that unit count multiplied by your selling price, representing the minimum monthly sales target. The contribution margin shows how much each unit contributes toward covering your fixed costs. A higher contribution margin means a lower break-even point. If your break-even point seems too high relative to your realistic sales capacity, you have three levers: raise your price, reduce variable costs, or lower fixed costs. The margin of safety, which is your actual sales minus break-even sales, indicates how much sales can drop before you start losing money. A healthy business typically has a margin of safety of at least 25-50%.

Key Factors That Affect Break-Even

Fixed Costs

Rent, salaries, insurance, equipment leases, and software subscriptions. Lowering fixed costs directly reduces the break-even point.

Variable Costs

Raw materials, packaging, shipping, and per-unit labor. Negotiating better supplier rates or buying in bulk can lower these.

Pricing Strategy

Even a small price increase dramatically reduces break-even. A $2 price increase on a $20 product can cut break-even by 15-20%.

Economies of Scale

As production volume increases, variable costs per unit often decrease through bulk purchasing discounts and production efficiencies.

Tips & Best Practices

  • ✓Lower your break-even point by reducing fixed costs or increasing your contribution margin.
  • ✓Review break-even analysis before launching any new product or service.
  • ✓Consider multiple scenarios — best case, worst case, and most likely.
  • ✓Recalculate break-even quarterly as costs and pricing evolve.
  • ✓For service businesses, calculate break-even in billable hours rather than units sold.
  • ✓Use break-even analysis when deciding between renting and purchasing equipment — higher fixed costs need higher volume to justify.

Frequently Asked Questions

What is a break-even point?▾
The break-even point is where your total revenue exactly equals your total costs (fixed plus variable). Below this point, you are operating at a loss. Above it, every additional unit sold generates profit equal to the contribution margin. It is one of the most critical metrics for any business because it tells you the minimum viable sales target.
What is contribution margin?▾
Contribution margin is the selling price per unit minus the variable cost per unit. It represents how much each unit sold contributes toward covering fixed costs and, eventually, generating profit. For example, if you sell a product for $50 and it costs $20 to produce, your contribution margin is $30. A higher contribution margin means you reach break-even with fewer sales.
How do I calculate break-even with multiple products?▾
For businesses selling multiple products, calculate a weighted average contribution margin based on your expected sales mix. Multiply each product's contribution margin by its percentage of total sales, then sum the results. Use this weighted average in the standard break-even formula. For example, if Product A ($15 margin) is 60% of sales and Product B ($25 margin) is 40%, the weighted margin is ($15 x 0.6) + ($25 x 0.4) = $19.
What is a good break-even point?▾
There is no universal "good" break-even point because it depends on your industry, market size, and sales capacity. However, a useful benchmark is that your break-even should be achievable within 30-50% of your maximum sales capacity. If you need to sell at 90% capacity just to break even, your business model is fragile and risky.
How does break-even analysis differ for service businesses?▾
Service businesses typically have higher fixed costs (salaries) and lower variable costs per unit. Instead of units, calculate break-even in billable hours or number of clients. For example, a consulting firm with $10,000 monthly fixed costs charging $150/hour with $20/hour variable cost would need 77 billable hours per month to break even: $10,000 / ($150 - $20) = 76.9 hours.
How often should I recalculate my break-even point?▾
Recalculate at least quarterly, or whenever there is a significant change in your cost structure or pricing. Events that should trigger a new analysis include rent increases, hiring new staff, supplier price changes, launching new products, or adjusting your pricing strategy. Regular break-even monitoring helps you catch margin erosion early.
By CalcMaven Editorial TeamLast Updated: February 2026

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