Break-Even Calculator
Calculate your break-even point in units and revenue. Input fixed costs, variable costs, and selling price.
What is Break-Even Calculator?
A break-even calculator determines exactly how many units you need to sell (or how much revenue you need) to cover all your costs — the point where total revenue equals total expenses, and you start generating profit. Understanding your break-even point is crucial for pricing decisions, sales forecasting, startup planning, and evaluating whether a business idea is viable. It separates fixed costs (rent, salaries, insurance — paid regardless of sales) from variable costs (materials, shipping — paid per unit sold).
How It Works
Enter your fixed costs (monthly or annual), variable cost per unit, and selling price per unit. The tool calculates: break-even units = fixed costs / (price - variable cost per unit). The denominator (price minus variable cost) is your contribution margin — how much each sale contributes toward covering fixed costs. It also shows break-even revenue, margin of safety at projected volumes, and how changes in price or costs shift the break-even point. A visual chart shows profit/loss at different volume levels.
Common Use Cases
- •Evaluating new product viability by determining if realistic sales volumes exceed break-even
- •Setting minimum pricing that covers all costs and achieves profitability at target volumes
- •Planning startup financials by calculating the revenue needed before the business becomes profitable
- •Analyzing the impact of fixed cost changes (new hire, bigger office) on required sales volume
- •Making pricing decisions by understanding how price changes affect the units needed to break even
- •Presenting financial projections to investors showing the path to profitability with volume targets
Frequently Asked Questions
What is the break-even point?▼
The point where total revenue equals total costs — you're neither making a profit nor losing money.
How is the break-even point calculated?▼
Fixed costs divided by the contribution per unit, where contribution is the selling price minus the variable cost per unit. With £10,000 of fixed costs, a £50 price and £30 variable cost, contribution is £20 and break-even is 500 units.
What is the difference between a fixed and a variable cost?▼
Fixed costs do not change with volume — rent, salaries, software subscriptions, insurance. Variable costs scale with each unit sold — materials, packaging, payment processing fees, shipping. Misclassifying a cost distorts the break-even point substantially.
What if my contribution margin is negative?▼
Then there is no break-even point: every additional sale increases your loss, because the price does not even cover the variable cost of producing it. Volume cannot fix this. The price has to rise or the variable cost has to fall.
What is the margin of safety?▼
The gap between your actual sales and your break-even sales, expressed as a percentage of actual. Selling 800 units against a 500-unit break-even gives a margin of safety of 37.5%, meaning sales could fall by that much before you start losing money.
Should break-even include my own salary?▼
Yes, if you want a meaningful figure. Excluding founder pay produces a flatteringly low break-even that leaves you working for nothing. Treat a market-rate salary for yourself as a fixed cost.
Further Reading
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