Break-Even Calculator

What is the break-even point?

The break-even point is the level of sales at which your total revenue exactly covers your total costs — you're not losing money, but not yet making a profit. Below it you're at a loss; above it, every additional sale adds profit. Knowing your break-even point tells you how much you need to sell to keep the business viable. Enter your costs and price above to find it.

How it's calculated

The key idea is the contribution margin — the selling price per unit minus the variable cost per unit. That's what each sale contributes toward covering your fixed costs. The formula is:

• Contribution margin = price per unit − variable cost per unit
• Break-even units = fixed costs ÷ contribution margin
• Break-even revenue = break-even units × price per unit

Fixed vs. variable costs

Fixed costs stay the same no matter how much you sell — rent, salaries, insurance, software subscriptions. Variable costs rise with each unit you produce or sell — materials, packaging, per-unit labor, payment fees. Sorting your costs correctly is the most important step in getting an accurate break-even point.

Using your break-even point

Once you know it, you can test scenarios: a higher price or lower variable cost reduces the units you need to sell, while higher fixed costs raise them. It's a powerful sanity check before launching a product, signing a lease, or running a promotion.

FAQ

Why must price exceed variable cost?

If each unit costs more to make than you sell it for, every sale loses money and you can never cover fixed costs — there's no break-even point. The contribution margin must be positive.

Does this include taxes?

No. It's a pre-tax operating break-even. Include taxes by treating them as part of your costs or by targeting a profit above break-even.

What if I sell multiple products?

This calculator assumes one product or an average unit. For a mix, use your average price and average variable cost, or calculate each product line separately.