Break-Even Calculator

The break-even point is the level of sales at which total revenue exactly covers total costs — neither a profit nor a loss. Below this point, you lose money. Above it, you start earning. The formula is fixed costs ÷ contribution margin per unit, where contribution margin = selling price − variable cost.

Fixed costs are expenses that don't change with sales volume: rent, salaries, software subscriptions, insurance. Variable costs scale with each unit sold: materials, packaging, payment processing fees, shipping. Knowing the split is essential for pricing decisions and forecasting.

Use the chart to see how profit grows as you exceed break-even. The slope of the profit line is your contribution margin per unit — steeper means each additional sale produces more profit. If the slope is shallow, even hitting big volumes won't drive much profit; you may need to raise prices or cut variable costs.

Break-even analysis is most useful in early planning, pricing reviews, and when evaluating whether to launch a new product. It does not account for taxes, opportunity cost of capital, or seasonality, so combine with cash-flow forecasts for major decisions.

Break-even analysis is the foundation of unit economics. By separating fixed costs (rent, salaries, insurance) from variable costs (raw materials, shipping, commissions), you can determine the minimum sales volume needed to cover all costs. Below break-even, every additional unit increases your loss; above break-even, every additional unit drops contribution margin straight to the bottom line.

Contribution margin per unit is the key driver of break-even. It equals price minus variable cost. The break-even quantity is simply fixed costs divided by contribution margin per unit. A business with $100,000 in monthly fixed costs and a $25 contribution margin per unit must sell 4,000 units per month to break even. Raising price or lowering variable cost shrinks the break-even target faster than cutting fixed costs.

Break-even shifts with every assumption change, which is why scenario analysis matters. What if a supplier raises prices 10%? What if you need to discount to clear inventory? What if you add a marketing manager? Use this calculator to test each scenario and see how the break-even moves. Build a margin of safety — most healthy businesses aim to operate at least 30% above break-even to absorb unexpected shocks.

Break-even analysis is most useful at the unit-economic level for individual products, then aggregated for the whole business. A profitable company can have unprofitable product lines that are subsidized by winners; a loss-making startup might have brilliant unit economics that just need scale. Calculating break-even by product, by channel and by customer segment reveals which parts of the business are doing the heavy lifting and which deserve a cost-cut or a price increase.