What is the break-even point?

The break-even point is the number of units you must sell to cover all your costs, with no profit and no loss. Below it you make a loss, above it you make a profit. It is found by dividing fixed costs by the contribution margin per unit.

What is contribution margin?

Contribution margin is the selling price per unit minus the variable cost per unit. It is the amount each sale contributes towards your fixed costs and then profit. If the price is below the variable cost, you can never break even.

How do I lower my break-even point?

Raise the price, cut the variable cost per unit, or reduce fixed costs. Each lifts the contribution margin or lowers the costs to cover, so you need fewer sales to break even. The calculator updates instantly so you can test each change.

Break-Even Calculator

Find out how many sales you need to cover your costs. Enter your fixed costs, the price you sell each unit for, and the variable cost to make or supply each unit. The calculator shows the break-even point in units and in sales revenue, plus the contribution margin from each sale.

Fixed costs

Price per unit

Variable cost per unit

0 units

to break even

Break-even sales$0

Contribution margin$0

How break-even is calculated

Each sale contributes its price minus its variable cost towards your fixed costs. That is the contribution margin. Divide the fixed costs by the contribution margin per unit and you get the number of units needed to cover everything. Multiply that by the price for the break-even sales figure.

Worked example

With $20,000 of fixed costs, a $50 price, and $30 variable cost, each sale contributes $20. You need 20,000 divided by 20, which is 1,000 units, to break even. That is $50,000 in sales. Every unit after that adds $20 of profit.

Related calculators

Profit Margin Calculator: margin on a sale.
Markup Calculator: markup, margin, and price.
Gross Margin Calculator: gross margin percentage.
Digital Ad Break Even Calculator: break even on ad spend.

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