Break-even Calculator

What the Break-even Calculator does

The break-even point is where revenue exactly covers fixed and variable costs. Each unit sold contributes its price minus its variable cost towards fixed costs; dividing fixed costs by that contribution gives the units you must sell before making any profit.

It also works as a break-even units calculator or a break-even point calculator.

Formula

• Contribution per unit = price − variable cost per unit
• Break-even units = fixed costs ÷ contribution per unit
• Units for a profit target = (fixed costs + target profit) ÷ contribution per unit
• Margin of safety = (expected sales − break-even) ÷ expected sales

Worked example

Using the starting values in the calculator above:

How to read the result

The margin of safety tells you how far sales can fall before you make a loss. A negative figure means your expected sales are below break-even.

Raising price usually moves break-even more than cutting costs, because every extra unit of price goes straight to contribution.

Related calculators

• Contribution Margin Calculator: Calculate total and per-unit contribution margin, the contribution margin ratio, operating income and break-even revenue.
• Markup vs Margin Calculator: Calculate markup and margin from cost and price, and find the price needed for a target margin.
• Operating Leverage Calculator: Calculate the degree of operating leverage and how much operating profit changes for a given change in sales.
• Pricing Strategy Calculator: Compare cost-plus, competitor-based and value-based prices for a product, with the margin each would earn.

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