How to use the break-even calculator
- Enter your fixed costs for a period, for example one month.
- Enter the selling price and the variable cost per unit.
- Optionally enter a target profit for the same period.
- Read the break-even units and revenue, the contribution margin, and the revenue vs total cost chart.
Worked example
$10,000 fixed costs, $50 price, $30 variable cost
Each unit contributes $20 (a 40% contribution margin ratio), so you break even at 500 units, or $25,000 in revenue. To earn a $5,000 profit you need 750 units ($37,500 revenue).
How it works
Contribution margin per unit = price − variable cost. Break-even units = fixed costs ÷ contribution margin, rounded up to whole units. Break-even revenue = fixed costs ÷ (contribution margin ÷ price). With a target profit, units = (fixed costs + target profit) ÷ contribution margin.
Assumptions
- Price and variable cost per unit stay the same at every volume.
- Fixed costs do not change within the range shown.
- Everything produced is sold.
Frequently asked questions
What counts as a fixed cost?
Costs that do not change with how much you sell in the period: rent, salaries, insurance, software subscriptions. Materials, packaging and payment fees are usually variable.
What if price is below variable cost?
Then every sale loses money and there is no break-even point. The calculator shows an error instead of a result.
Can I use this for a service business?
Yes. Treat a billable hour, a job or a client as the unit, with its direct costs as the variable cost.
Limitations
- Linear model: no volume discounts, step costs or capacity limits.
- Single product; for a product mix, use a weighted average price and variable cost.