Break-Even Calculator
How many units do you have to sell before the business stops losing money? Enter your fixed costs, selling price, and variable cost per unit to get break-even volume and revenue — and the sales needed to hit a profit target on top.
rent, salaries, insurance
materials, shipping
Break-even units
1,000
fixed ÷ (price − variable)
Break-even revenue
$25,000
Contribution margin / unit
$10.00
Contribution margin ratio
40.0%
Every unit sold contributes its price minus its variable cost toward fixed costs; once those are covered, the same contribution becomes pure profit. The analysis assumes a constant price and variable cost per unit — volume discounts and stepped fixed costs (a second machine, more staff) break that assumption.
The Break-Even Formula
Each unit sold at $25 with $15 of variable cost contributes $10 — a contribution margin of 40% of the price — toward fixed costs. With $10,000 of fixed costs, break-even is 10,000 ÷ 10 = 1,000 units, or $25,000 of revenue. Want $5,000 of profit instead of just surviving? Treat the profit like another fixed cost: (10,000 + 5,000) ÷ 10 = 1,500 units. And if variable cost meets or exceeds the price, no volume of sales ever breaks even — each unit makes the loss bigger.
Worked example ($10,000 fixed, $25 price, $15 variable)
Contribution margin $25 − $15 = $10/unit CM ratio $10 ÷ $25 = 40% Break-even units $10,000 ÷ $10 = 1,000 Break-even revenue 1,000 × $25 = $25,000 Units for $5k profit $15,000 ÷ $10 = 1,500 units = (fixed costs + target profit) ÷ (price − variable)
Frequently Asked Questions
What is contribution margin and why does it matter?
Contribution margin is the selling price minus the variable cost of one unit — what each sale 'contributes' toward fixed costs. A $25 product with $15 of variable cost contributes $10 per unit, a 40% contribution margin ratio. It matters because it, not revenue, determines how fast sales volume covers your overhead.
How do I calculate the break-even point in units?
Divide total fixed costs by the contribution margin per unit: units = fixed costs ÷ (price − variable cost). With $10,000 of fixed costs, a $25 price, and $15 variable cost, that's 10,000 ÷ 10 = 1,000 units, or $25,000 in revenue. Below that volume the business loses money; above it, each unit adds $10 of profit.
How do I work a profit target into break-even analysis?
Treat the desired profit like an extra fixed cost: units = (fixed costs + target profit) ÷ contribution margin. Using the same $10,000 fixed costs and $10 contribution margin, earning $5,000 of profit requires (10,000 + 5,000) ÷ 10 = 1,500 units — 50% more volume than plain break-even.
What if my variable cost is higher than my selling price?
Then no sales volume ever breaks even — every unit sold increases the loss, since each sale fails to cover even its own direct costs before touching overhead. The only fixes are raising the price, cutting the per-unit cost, or discontinuing the product. This calculator flags that case explicitly rather than showing a meaningless number.