Break-Even Calculator
Find how many units you need to sell to cover your costs. Enter your fixed costs, variable cost per unit and selling price per unit. Optionally add a target sales quantity to estimate profit or loss.
What Is a Break-Even Point?
The break-even point is the sales level at which total revenue equals total costs. At this point, a business has covered its costs but has not yet made a profit. Sales above break-even may generate a profit, while sales below it may produce a loss, assuming the cost and price estimates remain accurate.
This free break-even calculator helps small business owners, freelancers, sellers and students estimate how many units must be sold to cover fixed and variable costs. Enter the costs and selling price for one product or service, then calculate the break-even quantity. You can also enter a planned sales quantity to estimate the revenue, total costs and resulting profit or loss.
How to Use the Break-Even Calculator
- Enter your total fixed costs for the period you are planning, such as monthly rent, insurance or fixed salaries.
- Enter the variable cost to produce or deliver one unit, including costs that change with each sale.
- Enter the selling price for one unit.
- Optionally enter how many units you expect to sell to estimate profit or loss at that volume.
- Choose Calculate Break-Even and review the units, contribution per unit and revenue estimate.
Keep the time period consistent. If fixed costs are monthly, use monthly sales estimates and costs. If the selling price is lower than or equal to the variable cost per unit, the business cannot cover fixed costs through additional sales at that price under this simple model.
Break-Even Formula
The main formula is Break-even units = Fixed costs ÷ (Selling price per unit − Variable cost per unit). The amount in parentheses is called the contribution margin per unit: the money left from each sale after paying that unit’s variable cost. That contribution helps cover fixed costs, and once fixed costs are covered, additional contribution can generate profit.
For example, suppose fixed costs are $2,500, variable cost is $8 per unit and the selling price is $20. Contribution per unit is $20 − $8 = $12. Break-even units are $2,500 ÷ $12 = 208.33. Since you cannot sell a fraction of a unit in this example, round up to 209 units to cover the estimated fixed costs. At 209 units, sales revenue would be $4,180.
Understanding Fixed and Variable Costs
Fixed costs
Fixed costs generally remain stable within a particular range of activity and period. Examples can include rent, software subscriptions, business insurance, equipment leases and some salaries. They may change over time or when a business expands, so choose a realistic planning period and include costs that apply to it.
Variable costs
Variable costs change with the number of units sold or delivered. Depending on the business, these may include raw materials, packaging, per-order shipping, payment processing fees or piece-rate production costs. Use a reasonable average per-unit figure if costs vary between orders.
Selling price
The selling price is the amount received for one unit before subtracting the costs included in your model. If you regularly offer discounts or refunds, consider using an average realized selling price rather than the full list price.
What Does Contribution per Unit Mean?
Contribution per unit equals selling price minus variable cost per unit. If a product sells for $20 and costs $8 in variable expenses, each sale contributes $12 toward fixed costs and then profit. A higher contribution usually lowers the break-even quantity, while a lower contribution raises it. Contribution is not the same as net profit because fixed costs and other expenses still need to be accounted for.
Ways to Improve Your Break-Even Position
- Review costs: Identify avoidable fixed expenses and negotiate supplier pricing where practical.
- Improve unit economics: Reduce waste or streamline production without lowering product quality.
- Review pricing: Consider customer demand, competition and value delivered before changing prices.
- Use realistic sales forecasts: Avoid assuming every produced unit will be sold.
- Run multiple scenarios: Compare conservative, expected and optimistic prices, costs and sales quantities.
Limitations of Break-Even Analysis
This calculator uses a simplified model. It assumes the selling price and variable cost per unit remain constant, and that fixed costs stay unchanged within the relevant sales range. In practice, bulk discounts, capacity limits, taxes, returns, changing demand, mixed product sales and financing costs can affect results. For businesses selling several products, a weighted average contribution margin or a separate product-level analysis may be more appropriate.
Frequently Asked Questions
Can the break-even point be a decimal?
The mathematical result may be a decimal, but the calculator rounds the required number of units up to the next whole unit so the estimated target covers the fixed costs.
What if my selling price equals my variable cost?
There is no positive contribution per unit to cover fixed costs. You would need to change the price, lower variable costs or reconsider the model.
Does break-even mean the business is profitable?
No. Break-even means revenue and modeled costs are equal. Profit begins only after revenue exceeds the total costs included in the calculation.
Can I use this for a service business?
Yes, if you can estimate a consistent price per service unit and variable cost per service. A unit could be a job, appointment, project or billable hour.
Does this include taxes and loan payments?
Only if you include relevant amounts in your cost inputs. This tool is a planning estimate, not accounting, tax or investment advice.
Results are estimates based on the figures entered. Review your full costs and consult a qualified accounting professional for business decisions that require formal financial analysis.
Related Tools
Explore these related free tools: Unit Price Calculator · Discount Calculator · Loan Calculator.