Break-even calculator: units, revenue and profit targets
Divide fixed costs by the contribution margin, which is the price minus the variable cost of one unit. With $12,000 of fixed costs, a $50 price and a $20 variable cost, each sale contributes $30 and you break even at 400 units, or $20,000 of sales.
Inputs used by this calculator
Break-Even Calculator uses the fields below. The starting values reproduce the page example; replace them with values from the same units and time period before using the result.
| Input | Starting example | Accepted value | How it is used |
|---|---|---|---|
| Fixed costs for the period ($) | 12,000 | 0 to 1000000000000 | Supplies the fixed costs for the period ($) quantity used by the published equation or result breakdown. |
| Selling price per unit ($) | 50 | 0 to 1000000000 | Selects the unit or conversion path used by Break-Even Calculator. |
| Variable cost per unit ($) | 20 | 0 to 1000000000 | Selects the unit or conversion path used by Break-Even Calculator. |
| Target profit for the period ($) | 0 | 0 to 1000000000000 | Supplies the target profit for the period ($) quantity used by the published equation or result breakdown. |
| Expected units sold in the period | 600 | 0 to 1000000000000 | Selects the unit or conversion path used by Break-Even Calculator. |
What break-even means
The break-even point is the sales level where total revenue equals total costs: no profit and no loss. The SBA describes it as a key number for pricing and for any business plan shown to investors or lenders. Below it you lose money; every unit above it adds profit.
Fixed and variable costs
Fixed costs stay the same whatever you sell in the period: rent, salaries, insurance, loan payments, subscriptions. Variable costs rise with each unit: materials, packaging, shipping, card or marketplace fees and sales commissions. Sorting costs correctly matters more than any formula.
Contribution margin
The contribution margin is what one sale leaves after its own variable cost, money that goes first to fixed costs and then to profit. As a percentage of price it is the contribution margin ratio, which gives break-even revenue directly: fixed costs ÷ ratio.
contribution margin = price − variable costCM ratio = contribution margin ÷ pricebreak-even revenue = fixed costs ÷ CM ratioBreak-even units and revenue
Divide fixed costs by the contribution margin per unit. Because you cannot sell part of a unit, round up: 400.4 units means 401 sales. Multiply by the price for the break-even revenue.
break-even units = fixed costs ÷ (price − variable cost)Planning for a profit target
Add the profit you want to the fixed costs and divide by the contribution margin. To earn $6,000 on top of $12,000 of fixed costs at $30 per unit takes 600 units. The margin of safety compares expected sales with break-even sales: the share your sales could fall before you start losing money.
units for profit = (fixed costs + profit) ÷ contribution marginmargin of safety = (expected − break-even) ÷ expectedChanging price or costs
Raising the price or cutting variable cost increases the contribution margin and lowers the break-even point quickly; cutting fixed costs lowers it in proportion. A price cut has the opposite effect: dropping from $50 to $45 in the example raises break-even from 400 to 480 units. Try several prices before committing to a promotion.
Break-even with $10,000 of fixed costs
| Price | Variable cost | CM ratio | Break-even units | Break-even revenue |
|---|---|---|---|---|
| $10.00 | $4.00 | 60% | 1,667 | $16,670 |
| $25.00 | $10.00 | 60% | 667 | $16,675 |
| $50.00 | $20.00 | 60% | 334 | $16,700 |
| $100.00 | $60.00 | 40% | 250 | $25,000 |
| $200.00 | $150.00 | 25% | 200 | $40,000 |
Frequently asked questions
How do you calculate the break-even point?
Divide fixed costs by the price minus the variable cost per unit. $12,000 ÷ ($50 − $20) = 400 units.
How do you calculate break-even revenue?
Multiply break-even units by the price, or divide fixed costs by the contribution margin ratio: $12,000 ÷ 60% = $20,000.
What is a contribution margin?
The price of one unit minus its variable cost: the amount each sale contributes to fixed costs and profit.
What if my price is lower than my variable cost?
Then there is no break-even point: every additional sale increases the loss. The price or the unit cost has to change.
How many units do I need to sell to make a profit?
Add the target profit to fixed costs and divide by the contribution margin. With the example numbers, $6,000 of profit needs 600 units.
Is break-even the same as payback?
No. Break-even is a sales level in one period; payback is how long it takes to recover a one-time investment.
How do I handle several products?
Use a weighted average price and variable cost based on your expected sales mix, or run each product line separately.
What to keep in mind
Assumes one product (or a stable product mix), a constant price and a constant variable cost per unit. Volume discounts, capacity limits, taxes and fixed costs that step up with volume are not modeled.
Results are rounded for display in US format, with money in dollars and cents; CSV exports keep full calculation precision. This is a calculation summary, not an official certificate.