BUSINESS FINANCE CALCULATOR
Break-Even Calculator
Find out how many units you need to sell to cover your business costs. Calculate your break-even point and understand the sales revenue required to avoid a loss.
What Is a Break-Even Point?
The break-even point is the sales level at which total revenue equals total costs. At this point, a business makes neither a profit nor a loss.
Break-Even Units Formula
Contribution per Unit Formula
Break-Even Revenue Formula
Example Calculation
Suppose your business has $1,000 in fixed costs. You sell each product for $50, and the variable cost per unit is $30. The contribution per unit is $20, which is the amount available from each sale to cover fixed costs.
| Component | Amount |
|---|---|
| Fixed Costs | $1,000.00 |
| Selling Price per Unit | $50.00 |
| Variable Cost per Unit | $30.00 |
| Contribution per Unit | $20.00 |
| Exact Break-Even Units | 50 |
| Break-Even Units | 50 units |
| Break-Even Revenue | $2,500.00 |
Break-Even Units = $1,000 / ($50 - $30) = 50 units.
Break-Even Revenue = $1,000 / ($20 / $50) = $2,500.
When the exact break-even result is not a whole number, the required unit count is rounded up to the next whole unit.
Fixed Costs vs. Variable Costs
Fixed costs generally remain unchanged as sales volume changes, such as monthly rent. Variable costs change with the number of units produced or sold, such as materials and per-unit packaging.
Important Notes
This calculator uses the fixed costs, selling price per unit, and variable cost per unit entered in the form. The result assumes these values remain unchanged during the calculation.
Taxes, loan interest, advertising, marketing expenses, and other costs not included in the inputs are not automatically accounted for. Make sure your inputs reflect the costs relevant to your business.
The break-even result is an estimate based on the information provided, not a complete financial forecast. Actual results may differ when costs, prices, or sales conditions change.
Frequently Asked Questions
What is contribution margin per unit?
Contribution per unit is the selling price per unit minus the variable cost per unit. It represents the amount each sale contributes toward covering fixed costs and then generating profit.
Why are break-even units rounded up?
Products are generally sold in whole units. If the exact break-even result is a fraction, you must sell the next whole unit to reach or exceed the break-even point.
What is the difference between break-even units and break-even revenue?
Break-even units show the number of products that must be sold to cover total costs. Break-even revenue shows the corresponding sales value at the theoretical break-even point.
What happens when sales are below the break-even point?
The business generally operates at a loss because sales contribution has not covered its fixed costs.
What happens when sales exceed the break-even point?
Additional contribution after covering fixed costs can generate operating profit, assuming other factors remain unchanged.
Why must variable cost be lower than selling price?
Each unit must generate a positive contribution toward fixed costs. If variable cost equals or exceeds selling price, selling more units cannot cover fixed costs.
Does this calculator include taxes?
No. Taxes, financing costs and other expenses not included in the inputs are excluded from this estimate.