Break-Even Calculator
The units and revenue to cover your costs — fixed costs over the contribution margin per unit.
Updated
Break-even point
1,000units
$25,000.00 in revenue
- Contribution margin / unit
- $10.00
- Break-even units
- 1,000 units
- Break-even revenue
- $25,000.00
Estimates for general information, not financial advice.
In short
How do you calculate the break-even point in units?
Break-even units = fixed costs ÷ (price − variable cost). With $10,000.00 of fixed costs, a $25.00 price and a $15.00 variable cost, the contribution margin is $10.00 and break-even lands at 1,000 units, or $25,000.00 of revenue. Raise the price to $30.00 and the same fixed costs clear at 667 units.
The model assumes a single product at a single price with every cost splitting cleanly into fixed or variable, which real cost structures rarely do.
How to use the break-even calculator
Enter three numbers, the fixed costs for one period, the price you charge per unit and the variable cost of producing or delivering one unit, and the tool returns the break-even point in both units and revenue. The defaults stand in for a small business: $10,000.00 of fixed costs, a $25.00 price and a $15.00 variable cost break even at 1,000 units, which is $25,000.00 of revenue.
Keep the period consistent throughout. If the fixed costs you enter are a month of rent, salaries and subscriptions, then the answer is the number of units you need to sell in that month, and feeding in an annual overhead figure while thinking in monthly sales is the most common way this calculation goes quietly wrong.
1,000 units
Break-even at the defaults
$10,000.00 fixed costs, $10.00 margin
$25,000.00
Break-even revenue
1,000 units at the $25.00 price
40%
Contribution margin ratio
$10.00 margin ÷ $25.00 price
The concept underneath is the contribution margin. Every sale brings in the price and costs you the variable cost of fulfilling it, so what is left over is the part of that sale available to chip away at fixed costs.
That leftover is the contribution margin, and break-even is simply the point where enough of those leftovers have stacked up to cover the fixed costs entirely. Past that point the margin on each further sale stops paying for overhead and becomes profit.
The same idea expressed as a percentage of price is the contribution margin ratio, which at the defaults is $10.00 divided by $25.00, or 40 percent, and dividing fixed costs by that ratio gives the break-even revenue directly without going through units at all.
The most useful thing to do with this tool is to test the price rather than the volume. Because break-even units are fixed costs divided by the contribution margin, and the margin sits in the denominator, the break-even point does not move in proportion to a price change.
Lifting the price from $25.00 to $30.00 is a 20 percent increase, but it widens the margin from $10.00 to $15.00 and drops break-even from 1,000 units to 667, a fall of a third. Trimming the variable cost has the same leveraged effect from the other side. This page is general information, not financial or accounting advice.
Do
- Use one consistent period for the fixed costs and for the answer you read out.
- Enter the realised price after routine discounts rather than the list price.
- Split a semi-variable cost such as commission pay instead of forcing one bucket.
- Test the price and the variable cost before you test the volume.
Don't
- Enter an annual overhead figure while thinking in monthly sales.
- Expect break-even to move in proportion to the price, since price sits in the denominator.
- Sell harder when the price sits below the variable cost, because every sale deepens the loss.
- Treat fixed costs as fixed at any volume, as a second lease or shift steps them up.
Setting the price itself?
The contribution margin here starts from a price you already charge. The markup and margin calculator works the other way, pricing up from a unit cost to the margin you need.
Open the markup and margin calculator →What happens to the break-even point when only the price moves, holding fixed costs at $10,000.00 and the variable cost at $15.00 a unit. Read the units column from top to bottom: it collapses far faster than the price rises, because the price sits inside the denominator of the calculation rather than beside it, and that non-proportional relationship is the thing a single worked example cannot show.
| Price per unit | Contribution margin | Margin as a share of price | Break-even units | Break-even revenue |
|---|---|---|---|---|
| $15.00 | $0.00 | 0.0% | never breaks even | never breaks even |
| $15.50 | $0.50 | 3.2% | 20,000 | $310,000.00 |
| $16.00 | $1.00 | 6.3% | 10,000 | $160,000.00 |
| $17.00 | $2.00 | 11.8% | 5,000 | $85,000.00 |
| $18.00 | $3.00 | 16.7% | 3,334 | $60,012.00 |
| $20.00 | $5.00 | 25.0% | 2,000 | $40,000.00 |
| $22.00 | $7.00 | 31.8% | 1,429 | $31,438.00 |
| $25.00 | $10.00 | 40.0% | 1,000 | $25,000.00 |
| $28.00 | $13.00 | 46.4% | 770 | $21,560.00 |
| $30.00 | $15.00 | 50.0% | 667 | $20,010.00 |
| $32.00 | $17.00 | 53.1% | 589 | $18,848.00 |
| $35.00 | $20.00 | 57.1% | 500 | $17,500.00 |
| $40.00 | $25.00 | 62.5% | 400 | $16,000.00 |
| $50.00 | $35.00 | 70.0% | 286 | $14,300.00 |
Which costs are fixed and which are variable?
Sorting costs correctly is what makes the answer meaningful. Fixed costs bill the same regardless of volume: rent, salaried staff, insurance, accounting fees, the software that renews whether you ship one order or a thousand. Variable costs scale with each unit: materials, per-unit labour, packaging, payment processing fees, shipping.
Plenty of real costs sit awkwardly between the two, such as a salesperson on part salary and part commission, a utility bill that rises with production, or a supplier price that steps down at volume, and the honest way to handle those is to split them rather than force them into one bucket.
Note too that many fixed costs are only fixed within a range, since doubling output may mean a second lease or a second shift, and the model cannot see that step.
The formula, worked line by line
Break-even runs in two steps. First work out what a single sale actually contributes once its own variable cost has been paid, which is the price minus the variable cost per unit. Then count how many of those contributions it takes to cover the fixed costs.
That is the whole model: fixed costs are a hill of a known height, and each sale carries one contribution margin up it. The point where the hill is level is break-even, and every sale after that carries its margin straight into profit.
The same relationship can be expressed in money rather than units by turning the margin into a share of price. Divide the contribution margin by the price to get the contribution margin ratio, then divide fixed costs by that ratio to get break-even revenue directly.
The two routes agree, with one wrinkle: this tool computes revenue from the rounded-up unit count, because a fraction of a unit covers nothing, so the revenue figure can sit a few dollars above the pure ratio answer.
contribution margin = price per unit − variable cost per unit
break-even units = fixed costs ÷ contribution margin (rounded up)
break-even revenue = break-even units × price per unit
contribution margin ratio = contribution margin ÷ price per unit- Price per unit
- $25.00
- Variable cost per unit
- − $15.00
- Contribution margin
- $10.00
- Fixed costs to cover
- $10,000.00
- Break-even
- 10,000 ÷ 10 = 1,000 units
That is $25,000.00 of revenue. Check it the other way: the margin ratio is 10 ÷ 25 = 40 percent, and 10,000 ÷ 0.40 = $25,000.00, the same figure. Unit 1,001 contributes its full $10.00 to profit, because the fixed costs are already covered by then.
Now move only the price and watch the leverage. At $30.00 the margin widens to $15.00 and break-even falls to 10,000 ÷ 15 = 666.67, rounded up to 667 units and $20,010.00 of revenue. A 20 percent price rise cut the required volume by a third, because price sits inside the denominator rather than beside it.
Working from the cost side instead, trimming the variable cost from $15.00 to $12.00 gives a $13.00 margin and 10,000 ÷ 13 = 769.23, rounded up to 770 units. Both moves beat selling more at the old margin, which is the practical reason to test price and cost before testing volume.
Read it: A 20 percent price rise from $25.00 to $30.00 cuts the required volume by a third, because price sits inside the denominator of the calculation rather than beside it.
Values from the reference table above, units rounded up.
One more limit deserves stating: the model assumes one product at one price with costs that split cleanly in two, and real businesses have product mixes, discounting, stepped fixed costs that jump when you add a lease or a shift, and semi-variable costs such as commission-based pay. Treat the answer as a planning estimate to sanity-check against your own forecasts. This page is general information, not financial or accounting advice.
Questions people ask
What is the break-even point?
It is the level of sales at which total revenue exactly covers total costs, leaving neither profit nor loss. Below it you are losing money and above it you are making money. You find it by dividing fixed costs by the contribution margin, which is the price per unit minus the variable cost per unit. With $10,000.00 of fixed costs and a $10.00 margin per unit, break-even is 1,000 units, or $25,000.00 of revenue at a $25.00 price. Every unit after the thousandth adds its full margin to profit.
What is the contribution margin and the contribution margin ratio?
The contribution margin is what one sale brings in after its own variable cost has been paid: price per unit minus variable cost per unit. It is the portion of each sale available to cover fixed costs, and once those are covered it becomes profit. A $25.00 price with a $15.00 variable cost gives a $10.00 margin. The contribution margin ratio expresses the same thing as a share of price, here 10 ÷ 25 = 40 percent, and dividing fixed costs by that ratio gives break-even revenue directly.
What is the difference between fixed and variable costs?
Fixed costs bill the same regardless of volume, such as rent, salaried pay, insurance and software subscriptions. Variable costs scale with each unit made or sold, such as materials, per-unit labour, packaging, payment processing and shipping. Sorting each cost correctly matters because the model treats fixed costs as the total to be covered and variable costs as a drag on every sale. Costs that sit between the two, like commission-based pay or a utility bill that rises with production, are best split rather than forced into one bucket.
Why does the break-even point move so much when I change the price?
Because price sits inside the denominator of the calculation rather than beside it, so the relationship is not proportional. Break-even units are fixed costs divided by the contribution margin, and the margin is price minus variable cost. Lifting the price from $25.00 to $30.00 is only a 20 percent increase, but it widens the margin from $10.00 to $15.00 and drops break-even from 1,000 units to 667, a fall of a third. Cutting the variable cost has the same leveraged effect from the other direction.
What if the price is lower than the variable cost?
Then no break-even point exists. The contribution margin is zero or negative, so every unit sold deepens the loss instead of chipping away at fixed costs, and no amount of volume will ever reach profit. The calculator reports this rather than returning a misleading number. The only remedies are raising the price above the variable cost or cutting the variable cost below the price. Selling harder in that situation makes the position worse, which is exactly why the boundary case is worth checking first.
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