Break-Even Calculator
What this calculator does
This calculator determines the break-even point for a business or product—the number of units you must sell (or the revenue you must earn) before total revenue equals total costs. At the break-even point, profit is exactly zero; every unit sold beyond it generates profit.
Break-even analysis is a foundational concept in business planning, pricing strategy, and investment decisions. Whether you are launching a new product, opening a restaurant, or evaluating a side hustle, knowing your break-even point tells you exactly how much volume you need to cover your costs. It is one of the first calculations investors and lenders want to see in a business plan.
Understanding break-even also helps you set prices, evaluate the impact of cost changes, and decide whether a venture is financially viable before you commit significant capital.
How to use it
- Enter your fixed costs—expenses that do not change with volume (rent, salaries, insurance, equipment, etc.).
- Enter the price per unit you charge (or average selling price).
- Enter the variable cost per unit—costs that scale with each unit sold (materials, shipping, payment processing, etc.).
- Review the break-even units, break-even revenue, and contribution margin in the results.
Formulas used
Contribution margin per unit = Price per unit − Variable cost per unit This is the amount each sale contributes toward covering fixed costs.
Break-even units = Fixed costs / Contribution margin per unit Example: $10,000 fixed costs / ($50 price − $20 variable cost) = 333.3 → 334 units
Break-even revenue = Break-even units × Price per unit Example: 334 × $50 = $16,700
Contribution margin ratio = Contribution margin / Price Example: $30 / $50 = 60%. For every dollar of revenue, $0.60 goes toward fixed costs and profit.
Examples
Example 1 — Online store: Fixed costs = $2,500/month (platform fees, hosting, marketing). Price = $35. Variable cost = $12 (materials + shipping). Break-even = $2,500 / ($35 − $12) = 109 units/month, or $3,815 in revenue.
Example 2 — Food truck: Fixed costs = $4,000/month (truck payment, insurance, permits). Average item price = $12. Variable cost = $4.50. Break-even = $4,000 / $7.50 = 534 items/month, about 18 items/day.
Example 3 — SaaS product: Fixed costs = $15,000/month (servers, salaries, tools). Subscription = $49/month. Variable cost = $3 (payment processing + support). Break-even = $15,000 / $46 = 327 subscribers.
Tips and common mistakes
- Include all fixed costs. Entrepreneurs often forget costs like software subscriptions, insurance, accounting fees, and loan interest. Underestimating fixed costs makes your break-even look artificially low.
- Be honest about variable costs. Include payment processing fees (2.9% + $0.30 for credit cards), packaging, returns, and any per-unit cost that scales with volume.
- Break-even is not profit. It is the zero-profit point. You need to sell beyond break-even to actually make money and generate a return on your investment.
- Run sensitivity analysis. What happens if your price drops 10%? What if material costs rise? Recalculating break-even under different scenarios reveals how resilient your business model is.
- Time matters. A break-even of 500 units is great if you sell 200/week, but concerning if you sell 20/month. Always pair break-even volume with a realistic sales timeline.