Break-Even Point Calculator
The break-even point is where your total revenue equals your total costs—the point where you are neither making a profit nor a loss. Use this calculator to find out how much you need to sell to reach this critical milestone.
Your Break-Even Point
How It's Calculated
The break-even calculation helps you determine the minimum sales volume your business needs to cover all fixed and variable expenses, without making a loss. It is based on the concept of the contribution margin—the portion of sales revenue that remains after deducting variable costs. This remaining amount contributes toward covering fixed costs, and once those are fully covered, any additional sales become profit.
By knowing your break-even point, you can make informed decisions about pricing, sales targets, cost management, and profitability planning. It’s especially useful for startups, product launches, or evaluating the impact of cost changes on your business.
Contribution Margin per Unit = Sale Price - Variable Costs
Break-Even Units = Fixed Costs / Contribution Margin per Unit
Break-Even Revenue = Break-Even Units × Sale Price per Unit
For example, if you sell a product for $50, and your variable cost per unit is $30, your contribution margin per unit is $20. If your total fixed costs are $10,000, then your break-even point is:
- Break-Even Units: 10,000 ÷ 20 = 500 units
- Break-Even Revenue: 500 × 50 = $25,000
This means you must sell 500 units or generate $25,000 in revenue to break even. Any sales beyond this point contribute to profit.
Frequently Asked Questions
What is the purpose of the break-even analysis?
Break-even analysis shows you the exact sales volume you need to cover costs. It’s a critical tool for setting sales goals, evaluating risk, and making strategic decisions about pricing or cost control.
Does the break-even point guarantee profitability?
No. Reaching the break-even point only ensures your revenues equal your costs. Profitability starts when your sales go beyond the break-even point.
Can I use this for multiple products or services?
Yes, but it becomes more complex. For multiple products, you need to calculate a weighted average contribution margin based on the sales mix, then apply the formula. This calculator is most accurate for single-product or single-service analysis.
How do fixed and variable costs affect the break-even point?
Higher fixed costs raise your break-even point since you must sell more to cover expenses. Lower variable costs or higher prices increase your contribution margin, reducing the break-even point.
Is break-even analysis useful for startups?
Absolutely. For new businesses, knowing the break-even point helps set realistic sales targets and ensures your business plan is financially viable before investing significant resources.