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Break-even calculator

Enter your fixed costs, the price of one unit and what each unit costs to make or deliver. See how many units you must sell, and how much revenue, before you start making a profit.

Rent, salaries, software: costs that don’t change with sales.

Break-even point400 unitsSales of $20,000.00 cover $12,000.00 fixed costs
Contribution per unitPrice − variable cost$30.00
Contribution marginContribution ÷ price60%
Break-even units400 units
Break-even revenueFixed costs ÷ contribution margin$20,000.00

Break-even units = fixed costs ÷ (price − variable cost) = $12,000.00 ÷ $30.00 = 400, rounded up to whole units.

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How to use the break-even calculator

  1. Pick the currency and enter fixed costs for the period.
  2. Enter the price per unit and the variable cost per unit.
  3. Optionally add a target profit.
  4. Read the break-even units and revenue.

Break-even, worked through

A small bakery pays $12,000 a month in rent, wages and equipment leases. A celebration cake sells for $50 and costs $20 in ingredients and boxes. Contribution per cake = $30; contribution margin = 60%. Break-even = $12,000 ÷ $30 = 400 cakes, or $20,000 of sales a month. To earn $6,000 profit on top it needs ($12,000 + $6,000) ÷ $30 = 600 cakes.

Ways to lower the break-even point

  • Raise the price: at $55, contribution rises to $35 and break-even falls to 343 units.
  • Cut variable cost per unit through better supplier terms or less waste.
  • Reduce or delay fixed costs.
  • Sell more higher-contribution products in the mix.

Questions

What is the break-even formula?

Break-even units = fixed costs ÷ (price per unit − variable cost per unit). With $12,000 fixed costs, a $50 price and $20 variable cost, each sale contributes $30, so you break even at 400 units.

How do I calculate break-even revenue?

Divide fixed costs by the contribution margin ratio, (price − variable cost) ÷ price. $12,000 ÷ 0.6 = $20,000.

What is the difference between fixed and variable costs?

Fixed costs stay the same whatever you sell in the period: rent, salaries, software, insurance. Variable costs rise with each unit: materials, packaging, shipping, payment fees, sales commission.

What if the price is below the variable cost?

Then every sale loses money and there is no break-even point. Raise the price or cut the variable cost first.

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