Break-Even Calculator
Determine how many units you need to sell to cover all your costs and start making a profit.
How to Use
- Enter your total fixed costs -- these are expenses that remain constant regardless of how many units you produce (e.g., rent, salaries, insurance).
- Enter the variable cost per unit -- the cost to produce or acquire each additional unit (e.g., materials, packaging, shipping).
- Enter the selling price per unit -- the price your customers pay for each unit.
- Click "Calculate Break-Even Point" to see how many units you need to sell and the revenue required to cover all costs.
Frequently Asked Questions
What is the break-even point?
The break-even point is the number of units you need to sell so that your total revenue exactly equals your total costs (fixed costs + variable costs). At this point, you have zero profit and zero loss. Every unit sold beyond this point generates profit.
What is the contribution margin?
The contribution margin is the selling price per unit minus the variable cost per unit. It represents how much each unit "contributes" toward covering fixed costs and eventually generating profit. A higher contribution margin means you reach break-even faster.
What is the contribution margin ratio?
The contribution margin ratio is the contribution margin expressed as a percentage of the selling price. For example, if a product sells for $100 with a variable cost of $40, the contribution margin ratio is 60%. It shows what percentage of each sales dollar goes toward covering fixed costs and profit.
What if my variable cost is higher than the selling price?
If the variable cost per unit exceeds the selling price, you lose money on every unit sold. In this case, break-even is impossible, and you need to either raise your selling price or reduce your variable costs before the business can become profitable.