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Break Even Calculator
Use this free break even calculator to find how many units you must sell before you start making a profit. Enter your fixed costs, your variable cost per unit, and your selling price, and it gives your break-even units, break-even revenue, margin per unit, and a profit table for different sales volumes.
| Figure | Value |
|---|---|
| Margin per unit (price − variable cost) | $30.00 |
| Break-even units | 333.33 |
| Break-even revenue | $16,666.67 |
| Units to sell (rounded up) | 334 units |
| Margin ratio | 60.00% |
| Units sold | Revenue | Total cost | Profit |
|---|
How it works
Every business, from a lemonade stand to a factory, has to answer one question before anything else: how much do I need to sell just to stop losing money? That volume is the break-even point. Below it, every sale still leaves you short of covering your fixed costs; above it, every extra sale is pure contribution toward profit. Knowing the number turns vague worries about sales into a concrete monthly target you can plan around, price against, and measure yourself by.
The calculation splits your costs into two kinds. Fixed costs are the bills that arrive whether you sell one unit or a thousand: rent, salaries, insurance, software subscriptions, loan payments. Variable costs are the costs that follow each unit out the door: materials, packaging, payment-processing fees, delivery. The difference between your selling price and your variable cost is the contribution margin — the amount each sale contributes toward covering fixed costs. In our default example, the price is $50, the variable cost is $20, so each sale contributes $30.
Divide the fixed costs by that margin and you have the break-even volume. With $10,000 of fixed costs and a $30 margin, you need $10,000 ÷ $30 = 333.33 units. Because you cannot sell a third of a unit, the practical answer is 334 units: sell 333 and you are still $10 short; sell 334 and you are $20 ahead. Multiply by the price and you get break-even revenue: 333.33 × $50 = $16,666.67. The margin ratio — margin divided by price, 60% here — tells you what share of every sales dollar is available to cover fixed costs, which is handy when you compare products with different prices.
The profit table underneath the result shows what happens at different volumes, and it is worth reading carefully because profit grows in a straight line once you pass break-even. At 0 units you lose the full $10,000 of fixed costs. At 100 units you have earned $3,000 of margin against $10,000 of fixed costs, so you are $7,000 down. At 500 units you are $5,000 up, and at 1,000 units you are $20,000 up. That straight-line shape is exactly what the chart beside the calculator draws: profit climbs steadily with volume and crosses zero at the break-even dot.
There are three levers for lowering your break-even point, and they are not equal. Cutting fixed costs helps dollar for dollar — $1,000 less rent is $1,000 less to cover. Cutting variable cost helps on every unit you sell. Raising the price is usually the most powerful lever, because every extra dollar of price is an extra dollar of margin: raising the price from $50 to $55 in the example lifts the margin from $30 to $35 and drops break-even from 333 units to 286. The catch is that a higher price can reduce the number of units customers buy, so test price changes against real demand rather than assuming volume stays put. And if your price ever falls below your variable cost, there is no break-even point at all — every sale loses money, and selling more only loses more.
Worked example
Priya sells handmade candles. Her fixed costs are $10,000 a month for studio rent, insurance, and her website. Each candle costs $20 in wax, fragrance, jars, and packaging, and she sells each one for $50.
Step 1: Her margin per unit is $50 − $20 = $30.00.
Step 2: Her break-even volume is $10,000 ÷ $30 = 333.33 units, so in practice 334 candles.
Step 3: Her break-even revenue is 333.33 × $50 = $16,666.67.
Step 4: Checking the table, at 300 units her profit is 300 × $30 − $10,000 = −$1,000, and at 400 units it is 400 × $30 − $10,000 = $2,000 — the crossing point sits between them, at 333.33, exactly as calculated.
The result: Priya must sell 334 candles a month to cover her costs, bringing in $16,666.67 of revenue. If she raises her price to $55, her margin becomes $35 and break-even falls to 286 candles — but only if customers keep buying at the higher price.
FAQ
What is the break-even point?
The break-even point is the sales volume where total revenue exactly covers total costs, so profit is zero. Sell one unit more and you make a profit; sell one fewer and you make a loss. It is found by dividing fixed costs by the contribution margin per unit (price minus variable cost).
How do you calculate break-even units?
Divide fixed costs by the margin per unit. With $10,000 of fixed costs, a $20 variable cost, and a $50 price, the margin is $30 per unit, so break-even is $10,000 ÷ $30 = 333.33 units. Break-even revenue is then 333.33 × $50 = $16,666.67.
What is the difference between fixed and variable costs?
Fixed costs stay the same no matter how much you sell — rent, salaries, and insurance. Variable costs rise with every unit you make or sell — materials, packaging, and per-sale fees. Only variable costs are subtracted from the price to get the margin per unit; fixed costs are covered by the total margin across all units sold.
How can I lower my break-even point?
Three ways: cut fixed costs, cut the variable cost per unit, or raise the selling price. Raising the price usually moves the break-even point fastest, because every extra dollar of price is an extra dollar of margin — but only if customers keep buying at the higher price.
What if my price is lower than my variable cost?
Then there is no break-even point: every sale loses money, and selling more only loses more. The margin per unit is negative, so fixed costs can never be recovered. You must raise the price, cut the variable cost, or stop selling the product.