Break-Even Calculator
Break-even is the point where a business stops losing money on a product line. This calculator finds the unit volume and revenue you need before profit begins, using fixed costs, price and variable cost per unit — the three numbers that decide whether a price is viable at all.
Inputs
Result
1,000 units
Revenue needed 50,000
How it works
Break-even = Fixed costs / (Price − Variable cost)
How the break-even calculator works
Contribution margin per unit = price − variable cost. This is what each sale contributes towards fixed costs.
Break-even units = fixed costs ÷ contribution margin. Break-even revenue = break-even units × price.
To hit a profit target, add it to fixed costs: units = (fixed costs + target profit) ÷ contribution margin.
Worked example: a product with 40,000 of fixed costs
- Price: 250. Variable cost per unit: 150. Contribution margin: 100.
- Break-even units = 40,000 ÷ 100 = 400 units.
- Break-even revenue = 400 × 250 = 100,000.
- For 20,000 of profit: (40,000 + 20,000) ÷ 100 = 600 units.
- Cut the price to 220 and margin falls to 70, pushing break-even to 572 units — a 12% price cut needs 43% more volume.
Common mistakes to avoid
Misclassifying costs
Rent, salaries and software are fixed; materials, shipping and payment fees are variable. Putting a variable cost in the fixed bucket makes break-even look reachable at any price.
Forgetting payment processing and returns
Card fees of 2–3% and a return rate of a few percent both cut the contribution margin and should be modelled as variable costs.
Treating your own salary as optional
If the business must pay you, your pay is a fixed cost. Break-even that excludes the founder's wage is not break-even.
Frequently asked questions
What is contribution margin?
Price minus variable cost per unit — the amount each sale contributes to covering fixed costs and then to profit.
How do I find break-even for a service business?
Use billable hours as the unit: fixed costs divided by (hourly rate minus per-hour delivery cost).
What happens to break-even when I raise prices?
It falls sharply, because margin rises faster than price in percentage terms. A 10% price rise on a 40% margin lifts margin by 25%.
Does break-even account for tax?
No — it is a pre-tax operating measure. Add tax when you are modelling a net profit target.
What is the margin of safety?
The gap between current sales and break-even sales, expressed as a percentage. It tells you how far revenue can fall before losses start.
Learn more
The price-cut trap: why a 10% discount needs 50% more sales
Discounting feels like a growth lever. On thin margins it is a volume treadmill you cannot run fast enough.
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