Break-Even Calculator
Find how many units you need to sell to cover your fixed costs and start making a profit.
Business Details
Rent, salaries, insurance, etc.
Materials, labor, shipping per unit
Break-Even Point
You need to sell 334 units at $50.00 each to cover your $10,000 in fixed costs.
How Break-Even Analysis Works
The break-even point is where your total revenue exactly equals your total costs, meaning zero profit and zero loss. It is calculated by dividing your fixed costs by the contribution margin per unit (selling price minus variable cost per unit). Every unit sold beyond this point generates profit.
For example, if your fixed costs are $10,000/month, you sell each unit for $50, and each unit costs $20 to produce, your contribution margin is $30. You need to sell 334 units ($10,000 / $30) to break even.
Frequently Asked Questions
What counts as a fixed cost vs. a variable cost?
Fixed costs remain the same regardless of how many units you sell: rent, insurance, salaried employees, software subscriptions, and loan payments. Variable costs change with each unit produced: raw materials, shipping, packaging, sales commissions, and payment processing fees. Some costs are semi-variable, like utilities, which have a base charge plus usage-based charges.
How do I use break-even analysis for pricing decisions?
Calculate your break-even point at several price points. A higher price means fewer units needed to break even, but may reduce demand. A lower price requires more sales volume but may attract more customers. The sweet spot is where the break-even quantity is realistically achievable given your market size and competition.
What if I sell multiple products at different prices?
Calculate a weighted-average contribution margin based on your expected sales mix. If you sell Product A ($30 margin) 60% of the time and Product B ($50 margin) 40% of the time, your blended margin is $30 x 0.6 + $50 x 0.4 = $38. Use that blended margin for your break-even calculation.