How the break-even calculator works
Enter your fixed costs, the price you sell each unit for, and the variable cost to make or buy each unit, and the tool tells you how many units you must sell to cover all your costs. It also shows the revenue that represents and, if you set a profit target, how many units you need to reach it.
The break-even formula
The key number is contribution margin, the price per unit minus the variable cost per unit. That is what each sale contributes toward covering fixed costs. Break-even units equal fixed costs divided by the contribution margin. Once you pass that point, each additional sale adds its full margin to profit.
Fixed versus variable costs
Fixed costs stay roughly the same regardless of how much you sell, such as rent, insurance, and salaries. Variable costs scale with each unit, such as materials, packaging, and payment fees. Sorting your costs correctly is the most important step; misclassifying them is the most common source of a misleading break-even figure.
Using break-even to plan
Break-even analysis helps you sanity check pricing, set sales goals, and judge whether a product or project can work. Try raising the price or trimming variable cost to see how quickly the break-even point drops. Add a profit target to turn it from survival into a goal. This is a simplified model and not financial advice.
Frequently asked questions
How do I calculate break-even? Divide fixed costs by the contribution margin, which is price minus variable cost per unit.
What is contribution margin? The amount each sale contributes to fixed costs after covering its own variable cost.
How do I lower my break-even point? Raise price, cut variable cost per unit, or reduce fixed costs.
Related calculators: Cost Per Use, Markup and Margin, ROI.