Break-Even Calculator
The break-even calculator finds your break-even point — the exact number of units you need to sell or the revenue you need to generate to cover all your costs. Enter your fixed costs, variable cost per unit, and selling price per unit — the calculator returns your break-even point in units and in revenue instantly. No signup required.
Every business, product launch, and investment decision has a break-even point. Knowing yours before you start is one of the most important steps in financial planning — it tells you exactly how much you need to sell before you stop losing money, and helps you evaluate whether your pricing, cost structure, and sales targets are realistic. Break-even analysis is used by entrepreneurs, small business owners, product managers, investors, and anyone evaluating whether a new venture or pricing change is financially viable.
This break-even calculator works for any business type — product businesses, service businesses, restaurants, e-commerce, SaaS, freelancers, and any other model where you have a mix of fixed and variable costs. You can also use it to find your break-even price (what price you need to charge to cover costs at a given volume) and your break-even volume (how many customers or units you need at a given price).
Also useful: our Cash Flow Calculator projects your monthly and annual cash flow across all income and expenses, and our Markup Calculator finds the right selling price from any cost and target margin.
Break-Even Calculator
Find exactly how many units you need to sell to cover all costs.
Break-Even Revenue
Find the revenue you need using contribution margin ratio.
Target Profit Calculator
How many units do you need to sell to hit a specific profit goal?
What Is the Break-Even Point?
The break-even point is the level of sales at which total revenue exactly equals total costs — neither a profit nor a loss is made. Every unit sold above the break-even point contributes to profit; every unit below represents a loss. The break-even point is the floor of viable business operations.
Break-even analysis separates costs into two categories: fixed costs and variable costs. Fixed costs remain constant regardless of how many units are sold — rent, salaries, insurance, software subscriptions, and loan repayments are fixed costs. Variable costs change in proportion to sales volume — raw materials, packaging, payment processing fees, shipping, and sales commissions are variable costs. The relationship between these two cost types and the selling price determines the break-even point.
Understanding the break-even point answers several critical business questions simultaneously: Can this business survive at current pricing? How much does sales volume need to increase before a new hire pays for itself? What is the minimum order volume needed to justify a new product line? What happens to break-even if we raise prices by 10%? What happens if our raw material costs increase? Break-even analysis makes these questions answerable with a specific number rather than a guess.
Break-even is not a one-time calculation. As costs, prices, and product mix change, the break-even point changes too. Businesses that track their break-even point regularly — monthly or quarterly — have an early warning system for financial stress before it becomes a crisis. When actual sales fall below the break-even point, it is immediately visible and actionable. When costs rise and push the break-even point higher, management can respond before margins erode.
Break-Even Formula — How to Calculate Break-Even Point
Break-Even Point in Units
Break-Even Units
Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)
The denominator — Selling Price minus Variable Cost — is called the contribution margin per unit. It represents how much each unit sold contributes toward covering fixed costs before generating profit.
Example: A product business has $15,000 in monthly fixed costs (rent $4,000, salaries $8,000, insurance $600, software $400, miscellaneous $2,000). The product sells for $75 per unit. Variable cost per unit is $28 (materials $18, packaging $4, shipping $6). Contribution margin = $75 − $28 = $47. Break-even units = $15,000 ÷ $47 = 319 units per month.
The business must sell 320 units per month to cover all costs. Unit 320 is the first unit where profit begins.
Break-Even Point in Revenue
Break-Even Revenue
Fixed Costs ÷ Contribution Margin Ratio
The contribution margin ratio = (Selling Price − Variable Cost) ÷ Selling Price. It expresses the contribution margin as a percentage of the selling price.
Using the same example: Contribution margin ratio = $47 ÷ $75 = 0.627 = 62.7%. Break-even revenue = $15,000 ÷ 0.627 = $23,922 per month. The business needs to generate just under $24,000 in monthly revenue to break even.
Break-even revenue is particularly useful for service businesses or businesses with multiple products at different price points, where counting units is less meaningful than tracking total revenue.
Break-Even Point in Revenue
Contribution Margin per Unit
Selling Price − Variable Cost per Unit
Contribution Margin Ratio
(Selling Price − Variable Cost) ÷ Selling Price × 100
The contribution margin is one of the most useful numbers in business finance. It tells you exactly how much each additional sale contributes to covering your fixed costs and eventually generating profit. A high contribution margin means each sale is more powerful at covering fixed costs — you break even faster and profit accumulates more quickly above break-even.
A low contribution margin means you need high volume to cover fixed costs — which is typical for commodity businesses, grocery retail, and high-competition markets. A high contribution margin is typical for software, professional services, and premium branded products — these businesses can be profitable at relatively low sales volumes because each sale contributes a large amount toward fixed cost coverage.
How to Use This Break-Even Calculator
This break-even calculator has three modes:
Mode 1 — Standard Break-Even (Units and Revenue)
The most common calculation. Enter your fixed costs, variable cost per unit, and selling price — the calculator returns your break-even point in units, in revenue, and your contribution margin.
- Enter total monthly fixed costs — all costs that do not change with volume
- Enter variable cost per unit — all costs that scale directly with each unit sold
- Enter selling price per unit — the price customers pay
- The calculator returns break-even units, break-even revenue, contribution margin per unit, and contribution margin ratio
Tip: If you have multiple products, calculate break-even for your most important product or use a weighted average selling price and variable cost based on your sales mix.
Mode 2 — Target Profit Break-Even
Find how many units you need to sell to achieve a specific profit target, not just to break even. This is the more useful calculation for business planning.
Units for Target Profit
(Fixed Costs + Target Profit) ÷ Contribution Margin per Unit
- Enter your fixed costs, variable cost, and selling price
- Enter your monthly profit target
- The calculator returns the units and revenue needed to hit that profit target
Example: Using the earlier example ($15,000 fixed costs, $47 contribution margin), if the target profit is $8,000 per month: Required units = ($15,000 + $8,000) ÷ $47 = 489 units. The business needs to sell 489 units to generate $8,000 in monthly profit.
Mode 3 — Break-Even Price
Find the minimum selling price you need to charge to break even at a given sales volume. Useful when evaluating pricing options or responding to competitive pressure.
Break-Even Price
(Fixed Costs ÷ Units Sold) + Variable Cost per Unit
- Enter your fixed costs and variable cost per unit
- Enter the number of units you expect or are able to sell
- The calculator returns the minimum price per unit to cover all costs at that volume
Example: Fixed costs $15,000, variable cost $28 per unit, expected sales 400 units. Break-even price = ($15,000 ÷ 400) + $28 = $37.50 + $28 = $65.50. The minimum price to cover all costs at 400 units is $65.50. Any price above $65.50 generates profit.
Fixed Costs vs Variable Costs — What to Include
One of the most common break-even calculation errors is misclassifying costs. Including a variable cost as fixed, or vice versa, produces a break-even figure that is wrong and potentially misleading. Here is a clear guide to what belongs in each category:
| Fixed Costs | Variable Costs |
|---|---|
| Rent and property costs | Raw materials and components |
| Salaries and wages (permanent staff) | Packaging and labelling |
| Business insurance | Shipping and delivery costs |
| Loan repayments and lease payments | Payment processing fees (e.g. Stripe 2.9%) |
| Software subscriptions and licences | Sales commissions |
| Utilities (base amount) | Cost of goods sold (COGS) |
| Marketing retainers and fixed agency fees | Hourly contractor costs per unit |
| Depreciation (if used) | Returns and refund costs |
| Accountancy and professional fees | Variable utilities above base amount |
Some costs are semi-variable — they have a fixed component and a variable component. Utilities often have a fixed base charge plus variable usage. Treat the fixed component as a fixed cost and the variable component as a variable cost for the most accurate break-even calculation.
Break-Even Analysis — Real-World Examples
Example 1 — Product Business
A handmade candle business is evaluating whether to rent a dedicated workshop space. Current situation: working from home with $3,200 in monthly fixed costs and candles selling at $35 with $11 in variable costs.
Current break-even: $3,200 ÷ ($35 − $11) = $3,200 ÷ $24 = 134 candles per month ($4,690 revenue).
After renting workshop ($1,400/month more): New fixed costs $4,600. New break-even: $4,600 ÷ $24 = 192 candles per month ($6,720 revenue). The business owner needs to be confident they can sell at least 58 additional candles per month (192 − 134) before the workshop justifies its cost. If current sales are 200 units, the workshop pays for itself with only 8 units of safety margin — tight but viable.
Example 2 — Restaurant
A restaurant has $28,000 in monthly fixed costs (rent $8,000, kitchen staff $12,000, management $5,000, insurance and utilities $3,000). Average transaction value is $42. Food and beverage cost (variable) averages 32% of revenue, or $13.44 per transaction.
Contribution margin per transaction = $42 − $13.44 = $28.56. Break-even transactions = $28,000 ÷ $28.56 = 980 transactions per month. Break-even revenue = 980 × $42 = $41,160 per month. The restaurant needs 980 covers per month — approximately 33 covers per day on a 30-day month — to cover all costs before generating profit.
Example 3 — SaaS Business
A software product has $18,000 in monthly fixed costs (development salaries $12,000, infrastructure $1,500, marketing $2,500, admin $2,000). The product charges $49/month. Variable costs are minimal — $0.80 per customer per month for cloud storage.
Contribution margin = $49 − $0.80 = $48.20. Break-even customers = $18,000 ÷ $48.20 = 373 customers. Once the SaaS product reaches 373 paying subscribers, it covers all fixed costs. Customer 374 onwards contributes $48.20 per month to profit — which is why SaaS businesses can have explosive profitability at scale once fixed costs are covered.
Example 4 — Freelancer or Consultant
A freelance designer has $3,500 in monthly fixed costs (home office costs, software, insurance, professional fees, and their minimum personal income requirement). They charge $85 per hour. Variable costs are minimal — $2.50 per hour for software usage.
Contribution margin = $85 − $2.50 = $82.50. Break-even hours = $3,500 ÷ $82.50 = 43 billable hours per month. Working 22 business days per month, the freelancer needs to bill just under 2 hours per day on average to cover all costs. Everything above 43 hours is profit.
How to Reduce Your Break-Even Point
1. Increase Selling Price
Raising the selling price is the single most powerful lever for reducing break-even because it increases the contribution margin per unit without increasing fixed or variable costs. A 10% price increase on a product with a 40% contribution margin ratio increases the contribution margin by 25% — dramatically reducing the number of units needed to break even.
The risk of price increases is volume reduction — if customers are price-sensitive, higher prices may result in fewer sales. Evaluate price elasticity before increasing: in markets with strong brand differentiation, quality perception, or limited alternatives, price increases often produce minimal volume loss. In commodity markets, even small price increases can cause significant volume declines. Test price increases on a segment or product line before rolling out broadly.
2. Reduce Fixed Costs
Fixed costs are the primary driver of break-even point — reducing them directly reduces the number of units needed to cover costs. Audit every fixed cost line item for necessity and alternatives: Is the office space needed, or could the team work remotely? Are all software subscriptions actively used? Could any permanent staff roles be converted to variable-cost contractors? Could insurance, professional services, or leases be renegotiated?
The timing of fixed cost reduction matters for cash flow. Exiting a lease early often involves penalties; renegotiating before renewal is typically more effective. Converting fixed costs to variable costs — even at a higher per-unit rate — is sometimes worth doing if it reduces the break-even point and risk during uncertain periods.
3. Reduce Variable Costs
Variable cost reduction increases the contribution margin per unit, which reduces break-even — though the impact per dollar saved is smaller than fixed cost reduction because variable costs are already partially offset by revenue. The most impactful variable cost reduction levers are: renegotiating supplier prices (volume commitments, longer contracts, or alternative suppliers); reducing materials waste or improving production efficiency; switching to lower-cost packaging or shipping options; and reducing returns rates, which directly reduces the cost of goods sold per net unit.
For service businesses and SaaS, variable cost reduction typically means improving operational efficiency — reducing the average hours per client, automating repetitive tasks, or improving onboarding so support costs per customer decline with scale. Each of these improvements increases contribution margin and therefore reduces break-even customer count.
4. Improve Sales Mix
Most businesses sell multiple products or services at different prices and contribution margins. The overall break-even point depends not just on total volume but on the mix of what is being sold. Shifting sales toward higher-margin products — even without changing volume — reduces the blended break-even point.
Analyse your product or service mix by contribution margin ratio and identify which items generate the most contribution per unit or per hour of capacity used. Focus sales and marketing effort on high-margin products. Consider discontinuing or repricing low-margin products that drag the average contribution margin down and push break-even higher. A modest shift in mix from 30% high-margin to 40% high-margin can significantly reduce your overall break-even requirements.
Break-Even Point for Different Business Types
| Business Type | Primary Fixed Costs | Primary Variable Costs | Typical Contribution Margin |
|---|---|---|---|
| Retail / ecommerce | Rent, staff, marketing spend | COGS, shipping, payment fees | 30% – 60% |
| Restaurant / café | Rent, kitchen staff, equipment | Food & beverage cost (28–35%) | 40% – 55% |
| SaaS / software | Development, infrastructure, sales | Hosting, payment processing | 65% – 85% |
| Consulting / services | Base salaries, office, software | Contractor hours, tools per project | 50% – 75% |
| Manufacturing | Equipment, facility, permanent staff | Materials, energy, direct labour | 25% – 50% |
| Subscription box | Fulfilment setup, marketing | Product cost, packaging, shipping | 20% – 40% |
| Freelancer / agency | Minimum personal income, software | Contractor costs per project | 60% – 80% |
Contribution margin ranges are broad because they vary significantly by product quality tier, pricing strategy, and operational efficiency. Use these as starting benchmarks and calculate your own contribution margin using the break-even calculator above.
Frequently Asked Questions
How do I calculate the break-even point?
Divide your total fixed costs by your contribution margin per unit. Contribution margin per unit = Selling Price − Variable Cost per Unit. Formula: Break-Even Units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit). Example: Fixed costs $10,000, selling price $50, variable cost $20. Contribution margin = $50 − $20 = $30. Break-even = $10,000 ÷ $30 = 334 units. For break-even in revenue: multiply break-even units by selling price, or divide fixed costs by the contribution margin ratio. Use the break-even calculator above to get your result instantly.
What is a contribution margin?
The contribution margin is the selling price minus the variable cost per unit — the amount each sale contributes toward covering fixed costs and generating profit. If a product sells for $80 and has $30 in variable costs, the contribution margin is $50. The first $50 from each sale goes toward fixed costs; once fixed costs are fully covered (at the break-even point), each additional $50 is pure profit. The contribution margin ratio expresses this as a percentage of selling price: $50 ÷ $80 = 62.5%. A higher contribution margin ratio means you need fewer sales to cover fixed costs.
What is the difference between fixed costs and variable costs?
Fixed costs remain constant regardless of how much you produce or sell — rent, salaried staff, insurance, and software subscriptions are fixed costs. They are the same whether you sell 10 units or 10,000 units. Variable costs change in direct proportion to sales volume — raw materials, packaging, shipping, and payment processing fees are variable costs. They are zero when nothing is sold and scale linearly with output. The distinction matters for break-even analysis because fixed costs are the hurdle you must clear before any profit is generated, while variable costs reduce the contribution each sale makes toward clearing that hurdle.
How do I calculate break-even revenue?
Divide your total fixed costs by your contribution margin ratio. Contribution margin ratio = (Selling Price − Variable Cost) ÷ Selling Price. Formula: Break-Even Revenue = Fixed Costs ÷ Contribution Margin Ratio. Example: Fixed costs $12,000, selling price $60, variable cost $24. Contribution margin = $36. Contribution margin ratio = $36 ÷ $60 = 0.60 = 60%. Break-even revenue = $12,000 ÷ 0.60 = $20,000. The business needs to generate $20,000 in revenue to cover all costs.
What happens to break-even if I raise my prices?
Raising prices increases the contribution margin per unit, which reduces the break-even point — assuming volume does not fall. If a product priced at $60 with $20 variable costs has a $40 contribution margin and $16,000 in fixed costs, break-even is 400 units. If the price rises to $70, contribution margin becomes $50, and break-even falls to 320 units. The same fixed costs now require 80 fewer sales to cover. This is why pricing power is so valuable — a modest price increase has a disproportionately large impact on profitability once break-even is cleared.
How does break-even analysis help with business decisions?
Break-even analysis makes the financial impact of business decisions concrete and quantifiable. Before hiring a new employee, you can calculate how many additional units must be sold to cover the salary cost. Before renting a larger space, you can calculate the additional monthly revenue needed to justify the higher rent. Before launching a new product, you can calculate the minimum sales volume needed to make it worth the investment. Before cutting prices, you can calculate how much additional volume is needed to compensate for the lower contribution margin. Every significant financial decision changes either fixed costs, variable costs, or selling price — and therefore changes the break-even point.
What is a good break-even point?
There is no universally good break-even point — it depends entirely on your market size, sales capacity, and competitive position. A break-even point of 1,000 units per month is excellent for a business that can readily sell 10,000 units but catastrophic for one that can only sell 800. The most useful evaluation is the margin of safety: how far above break-even are your current or projected sales? A margin of safety of 20% or more (meaning current sales are at least 20% above break-even) is generally considered healthy. A margin of safety below 10% means the business is vulnerable to any revenue decline.
How do I calculate break-even for a restaurant?
For a restaurant, fixed costs include rent, kitchen and front-of-house salaries, insurance, utilities base cost, and equipment leases. Variable costs are primarily food and beverage cost — typically 28% to 35% of revenue — plus any variable labour. Calculate the average transaction value (total revenue ÷ number of covers). Variable cost per transaction = average transaction × food cost percentage. Contribution margin per transaction = average transaction − variable cost per transaction. Break-even covers = Fixed Costs ÷ Contribution Margin per Transaction. Divide by 30 to find required daily covers. Use the break-even calculator above and enter your figures for an instant result.
What is the margin of safety?
The margin of safety is the difference between actual or projected sales and the break-even point — expressed as a number of units, revenue amount, or percentage. Formula: Margin of Safety % = (Actual Sales − Break-Even Sales) ÷ Actual Sales × 100. Example: A business breaks even at 400 units and currently sells 520 units. Margin of safety = (520 − 400) ÷ 520 × 100 = 23%. This means sales can fall by 23% before the business starts losing money. A higher margin of safety means the business is less vulnerable to revenue declines — a critical metric for risk assessment.
Can I use this break-even calculator for a service business?
Yes — the break-even formula works for service businesses, but you may need to adapt the inputs. For a service business, “selling price per unit” is typically your hourly rate or project fee. “Variable cost per unit” is any direct cost per hour or per project — contractor costs, materials, tools, or platform fees. “Fixed costs” are all overhead that remains constant regardless of workload: minimum salaries, rent, insurance, software, and your own minimum income requirement. The calculator returns the number of billable hours or projects needed per month to cover all costs.