Break-Even Calculator
Find how many units you need to sell to cover your costs.
Your numbers
Rent, salaries, and other costs that don’t change with volume.
Break-even point
- Contribution margin / unit
- $20.00
- Break-even units
- 500
- Break-even revenue
- $25,000.00
The break-even point is the moment a business stops losing money and starts making it — the number of sales where revenue exactly covers costs. Knowing it tells you whether a price, a product, or a whole venture can actually work. Here's how to calculate it.
Fixed vs variable costs
Break-even hinges on splitting costs into two types:
- Fixed costs don't change with sales volume — rent, salaries, software, insurance. You pay them whether you sell 0 units or 10,000.
- Variable costs scale with each unit — materials, packaging, shipping, payment fees.
Contribution margin is the key
Each sale's contribution margin is what's left from the price after variable costs, available to chip away at fixed costs:
Contribution margin = price per unit − variable cost per unit
If you sell for $50 with $30 of variable cost, each unit contributes $20 toward covering your fixed costs.
The break-even formula
Break-even units = fixed costs ÷ contribution margin
With $10,000 of fixed costs and a $20 margin: 10,000 ÷ 20 = 500 units. At $50 each, that's $25,000 in revenue to break even. The Break-Even Calculator computes both instantly.
Why it matters
The break-even point answers critical questions before you commit:
- Is this price viable? If breaking even requires more units than you can realistically sell, the price (or cost) is wrong.
- Can I afford this fixed cost? A new hire or bigger lease raises fixed costs and pushes break-even higher.
- How much cushion do I have? Sales above break-even are profit; the gap is your margin of safety.
When you can't break even
If your variable cost per unit is at or above your price, the contribution margin is zero or negative — every sale loses money, and no volume fixes it. The only solutions are raising the price or cutting the variable cost. The calculator flags this case.
How to lower your break-even point
- Raise your price (if the market allows) to widen the contribution margin.
- Cut variable costs through cheaper sourcing, lower fees, or efficient shipping.
- Reduce fixed costs — the lower your overhead, the fewer units you need.
- Increase the margin mix by promoting higher-margin products.
The bottom line
Break-even = fixed costs ÷ (price − variable cost). It's the single best sanity check before launching a product or setting a price. Run your numbers in the Break-Even Calculator, and if the required volume looks unrealistic, fix the price or costs before you start.
Frequently asked questions
How do I calculate the break-even point?
Divide your fixed costs by the contribution margin per unit (price − variable cost). With $10,000 fixed costs and a $20 margin, you break even at 500 units, or $25,000 in revenue.
What is contribution margin?
Contribution margin is what each sale contributes toward fixed costs after variable costs: price per unit − variable cost per unit. A $50 price with $30 variable cost has a $20 contribution margin.
What is the difference between fixed and variable costs?
Fixed costs (rent, salaries, software) stay the same regardless of how much you sell. Variable costs (materials, packaging, shipping, fees) rise with each unit sold. Break-even depends on both.
What does the break-even point tell me?
It’s the sales volume where revenue exactly covers all costs — no profit, no loss. Below it you lose money; above it, every sale’s contribution margin is profit. It’s a key viability check for a price or product.
How do I lower my break-even point?
Raise your price, cut variable costs (cheaper sourcing, lower fees), or reduce fixed costs (overhead). Each widens the contribution margin or shrinks what you must cover, so you break even on fewer units.
What if my price is below my variable cost?
Then your contribution margin is negative — every sale loses money and no amount of volume reaches break-even. The only fixes are raising the price or cutting the variable cost. The calculator flags this.
What is the margin of safety?
It’s the gap between your actual (or expected) sales and the break-even point. A larger margin of safety means more cushion before you start losing money, and more profit once costs are covered.
Does break-even include my own salary?
Only if you include it as a fixed cost. If you want the business to cover your pay, add your salary to fixed costs — the break-even point will rise to reflect the higher amount you need to cover.