Free Business Calculator

Break-Even Point Calculator

Calculate how many units you need to sell and how much revenue you need to generate to cover your business costs.

Calculate Your Break-Even Point

Enter your fixed costs, variable cost per unit, selling price per unit, and optional additional sales units.

Costs that remain relatively constant.
Cost associated with producing one unit.
Selling price for one unit.
Optional: units sold above the break-even point.
Break-Even Point
0 units
Break-Even Revenue 0.00
Contribution Margin / Unit 0.00
Fixed Costs 0.00
Profit at Expected Sales 0.00

Break-even units are calculated by dividing fixed costs by the contribution margin per unit. The result is rounded up to the next whole unit. Expected profit assumes sales equal the break-even units plus the additional units entered above.

What Is a Break-Even Point?

The break-even point is the level of sales at which total revenue equals total costs. At this point, a business has neither a profit nor a loss.

The break-even point is commonly used by entrepreneurs and small business owners to understand how many products or services need to be sold before the business starts generating a profit.

Break-Even Point Formula

Break-Even Units = Fixed Costs ÷ (Selling Price Per Unit − Variable Cost Per Unit)

The difference between the selling price and the variable cost is known as the contribution margin per unit. This amount contributes toward covering fixed costs.

Example of a Break-Even Calculation

Suppose a small business has $10,000 in fixed costs. The business sells a product for $50 per unit and has a variable cost of $20 per unit.

The contribution margin is $30 per unit. Dividing $10,000 by $30 produces approximately 333.33 units. Because a business cannot normally sell a fraction of a product, the break-even point is 334 units.

$10,000 ÷ ($50 − $20) = 333.33

Break-Even Point = 334 units

Why Is Break-Even Analysis Important?

Break-even analysis helps businesses understand the minimum sales volume required to cover costs. It can also support pricing decisions, sales targets, budgeting, and business planning.

Entrepreneurs can use break-even calculations when launching a product, evaluating a new service, planning a marketing campaign, or estimating the sales required for a business project.

Fixed Costs vs. Variable Costs

Fixed costs generally do not change directly with the number of units produced or sold. Examples can include rent, certain salaries, insurance, and software subscriptions.

Variable costs change as production or sales volume changes. Examples can include materials, packaging, transaction fees, and per-unit manufacturing costs.

What Happens Below the Break-Even Point?

When sales remain below the break-even point, the business has not generated enough contribution margin to cover its fixed costs. This generally results in an operating loss.

What Happens Above the Break-Even Point?

Once sales exceed the break-even point, additional contribution margin can contribute to operating profit, assuming the underlying cost and pricing assumptions remain valid.

Using Break-Even Analysis for Small Businesses

Break-even analysis is particularly useful for small businesses because it provides a simple way to connect costs, pricing, and sales volume.

A business owner can use the break-even point to establish a minimum sales target. For example, knowing that 334 units are required to break even gives the business a measurable target before considering additional profit goals.

However, break-even calculations are based on the assumptions entered into the calculator. Actual business results can be affected by changing costs, discounts, taxes, demand, inventory, financing expenses, and other factors.

This calculator is provided for general informational and educational purposes. It should not replace detailed accounting, financial planning, or professional financial advice.

Frequently Asked Questions

What is the break-even point?

The break-even point is the sales level where total revenue equals total costs, resulting in neither a profit nor a loss.

How do you calculate break-even units?

Break-even units are calculated by dividing fixed costs by the contribution margin per unit. The contribution margin is the selling price per unit minus the variable cost per unit.

What is contribution margin?

Contribution margin per unit is the selling price of one unit minus its variable cost. It represents the amount available to contribute toward fixed costs and eventually profit.

Can a business have a break-even point of zero?

If fixed costs are zero, the mathematical break-even point may be zero units. Most real businesses, however, have at least some fixed costs.

What if my selling price is lower than my variable cost?

If the selling price is equal to or lower than the variable cost per unit, each additional sale does not generate enough contribution margin to cover fixed costs. A standard break-even point cannot be calculated under those assumptions.

How many units do I need to sell to make a profit?

You need to sell more than the break-even number of units to generate an operating profit, assuming your selling price, variable costs, and fixed costs remain unchanged.