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Break-even Calculator

Calculate your break-even point, contribution margin, and analyze profitability for business planning.
Decision Context
Page-specific guidance for using this result in a real planning decision.

This page helps identify the sales volume required to cover fixed and variable costs before a product, service, or project becomes profitable.

Use it for pricing decisions, launch planning, cost review, and deciding whether a business model can support a realistic sales target.

The key insight is the distance between current sales and break-even level, because that gap tells you whether the issue is pricing, volume, cost structure, or all three.

Calculator
Enter your values

Monthly costs that don't vary with production (rent, salaries, insurance)

Analysis
Interpretation of the current calculator output

Enter values to see detailed analysis and insights.

How to Use

Step-by-step instructions
  1. 1Enter your total fixed costs (rent, salaries, insurance, etc.)
  2. 2Input the variable cost per unit (materials, packaging, etc.)
  3. 3Set your selling price per unit
  4. 4Review the break-even point in units and revenue
  5. 5Use the profit chart to see profitability at different volumes

Break-even Point Formula

The break-even point is where total revenue equals total costs (fixed + variable). At this point, there's no profit or loss.
Break-even Units = Fixed Costs ÷ (Selling Price - Variable Cost)

Variables:

Fixed CostsCosts that don't change with production volume (rent, salaries, etc.)
Variable CostCost per unit that changes with production (materials, direct labor)
Selling PricePrice charged per unit sold
Contribution MarginSelling Price - Variable Cost per unit

Example

Small Business Break-even Example

Inputs:

Fixed Costs:$10,000/month
Variable Cost per Unit:$5
Selling Price:$15

Steps:

  1. 1.Contribution Margin = $15 - $5 = $10
  2. 2.Break-even Units = $10,000 ÷ $10 = 1,000 units
  3. 3.Break-even Revenue = 1,000 × $15 = $15,000
  4. 4.Contribution Margin Ratio = ($10 ÷ $15) × 100 = 66.7%
Result:
Need to sell 1,000 units (generating $15,000 in revenue) to break even.

Frequently Asked Questions

What is a good contribution margin ratio?

A contribution margin of 40-60% is typical for many businesses. Higher is better, as it means more revenue goes toward covering fixed costs and generating profit.

Why is break-even analysis important?

It helps you understand minimum sales needed to avoid losses, set sales targets, price products appropriately, and make informed decisions about cost structure.

How can I lower my break-even point?

Reduce fixed costs, decrease variable costs per unit, increase selling price, or improve production efficiency to increase contribution margin.