Break-Even Calculator
How many you need to sell to cover your costs, and the profit after that.
Good to know. Every sale after break-even is profit. Every sale before it is a very expensive hobby.
How it works
In plain words
Each sale contributes its price minus its variable cost towards the fixed costs. Divide the fixed costs by that contribution to find how many sales cover them.
The formula
contribution = price − variable cost break-even units = fixed costs ÷ contribution profit = units × contribution − fixed costs
Worked example
Each sale at 50 costs 30, leaving 20 towards fixed costs of 10,000: 10,000 ÷ 20 = 500 units, or 25,000 of revenue. At 800 units, profit is 300 × 20 = 6,000.
Sources
No outside data or rates: this is plain arithmetic.
4 automated tests check its answers on every change.
About the break-even calculator
The break-even point is where sales cover all your costs: no profit, no loss. Below it you lose money; above it, every sale adds to profit. It is the first number to work out for a new product, a price change or a business plan.
It depends on two kinds of cost. Fixed costs stay the same however much you sell in a period: rent, salaries, software, insurance, loan payments. Variable costs come with each sale: materials, packaging, shipping, card fees and sales commission. The difference between the price and the variable cost is the contribution each sale makes towards the fixed costs.
Use the same period throughout: if fixed costs are per month, the result is units per month. Round up, since you can’t sell part of a unit.
There are three ways to lower the break-even point: raise the price, cut the variable cost, or cut fixed costs. Raising the price is often the most powerful. In the example, a price of 55 instead of 50 lifts the contribution from 20 to 25 and cuts break-even from 500 units to 400, if you still sell as many.
Questions people ask
How do I calculate the break-even point?
Divide fixed costs by the price minus the variable cost per unit. With 10,000 of fixed costs, a price of 50 and a variable cost of 30: 10,000 ÷ 20 = 500 units.
What is contribution margin?
The price minus the variable cost per unit: what each sale contributes towards fixed costs and then profit. As a percentage, it is that amount divided by the price.
How do I find break-even in revenue?
Multiply the break-even units by the price, or divide fixed costs by the contribution margin ratio: 10,000 ÷ 40% = 25,000.