Break Even Calculator
Enter your fixed costs, variable cost per unit and selling price to find how many units you must sell to break even, the break-even revenue, contribution margin, margin of safety and profit at your expected sales. All calculations run in your browser.
Rent, salaries, insurance, software…
Materials, packaging, fees per sale
For margin of safety and profit
Price sensitivity
How the break-even point moves if you change the price and keep costs the same.
Profit at different sales volumes
How to use the Break Even Calculator
- Enter fixed costs for the period (month or year): rent, salaries, insurance and other costs that do not change with sales.
- Enter the variable cost per unit: materials, packaging, shipping and payment fees for each unit sold.
- Enter the selling price per unit (without sales tax).
- Add expected sales and a target profit to see margin of safety and the units needed for your goal.
- Read the results and the chart: the lines cross at the break-even point. Check the price sensitivity table, then copy or download the analysis.
Break-even formulas
| Measure | Formula |
|---|---|
| Contribution margin per unit | Price − variable cost per unit |
| Contribution margin ratio | Contribution margin ÷ price |
| Break-even units | Fixed costs ÷ contribution margin per unit |
| Break-even revenue | Fixed costs ÷ contribution margin ratio |
| Profit at Q units | Q × contribution margin − fixed costs |
| Units for a target profit | (Fixed costs + target profit) ÷ contribution margin |
| Margin of safety | (Expected sales − break-even sales) ÷ expected sales |
| Degree of operating leverage | Total contribution margin ÷ operating profit |
Worked example
A small business sells a product for $45. Each unit costs $18 in materials, packaging and fees, and fixed costs are $30,000 a month.
- Contribution margin = $45 − $18 = $27 per unit (ratio 27 ÷ 45 = 60%).
- Break-even units = $30,000 ÷ $27 = 1,111.11, so 1,112 units a month.
- Break-even revenue = $30,000 ÷ 0.60 = $50,000.
- At 1,500 units, profit = 1,500 × $27 − $30,000 = $10,500, and the margin of safety is (1,500 − 1,111.11) ÷ 1,500 = 25.9%.
- To earn a $10,000 profit you need ($30,000 + $10,000) ÷ $27 = 1,481.5, so 1,482 units.
Raising the price by 10% to $49.50 lifts the contribution margin to $31.50 and drops the break-even point to 953 units, which is why pricing is often the strongest lever.
Limits of break-even analysis
The model assumes a constant price, a constant variable cost per unit and fixed costs that stay fixed within the sales range. In reality volume discounts, overtime and step costs (a new hire, a bigger warehouse) bend the lines. Re-run the analysis for each realistic scenario, and use the profit margin calculator to set prices or the discount calculator to see what a promotion does to your price.
Frequently asked questions
What is the break-even point formula?
Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The denominator is the contribution margin per unit. Break-even revenue = fixed costs ÷ contribution margin ratio, where the ratio is contribution margin ÷ price.
What is contribution margin?
Contribution margin is what each unit sold contributes toward fixed costs and then profit: price minus variable cost. If you sell at $45 and each unit costs $18 to make and ship, the contribution margin is $27 per unit, or 60% of the price.
Why is the break-even point rounded up?
You cannot sell a fraction of a unit, and selling one unit less than the exact break-even still leaves a small loss. So 1,111.11 units means you need to sell 1,112 units to cover all costs.
What is the margin of safety?
Margin of safety is how far sales can fall before you reach break-even: (expected sales − break-even sales) ÷ expected sales. A margin of safety of 25% means sales could drop by a quarter before you start losing money.
How do I lower my break-even point?
Raise the price, lower the variable cost per unit, or cut fixed costs. Raising the price usually has the biggest effect because it increases the contribution margin of every unit; the price sensitivity table shows by how much.
Can I use this for a service business?
Yes. Treat one billable hour, project or client as the unit. The price is what you charge per unit, the variable cost is what each unit costs you directly (contractor time, materials, payment fees), and fixed costs are your monthly overhead.