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Break-Even Calculator

Find how many units you need to sell, and how much revenue you need, to cover fixed and variable costs. Add a profit target and expected sales to see the margin of safety.

Inputs

Break-even point

297 units

Break-even revenue$13,365.00

To earn the target profit

371 units

Revenue needed$16,695.00

Margin of safety

203 units

Share of expected sales40.6%

How it's calculated

  1. Contribution margin per unit = price − variable cost = $45.00 − $18.00 = $27.00 (60.0% of the price).
  2. Break-even units = fixed costs ÷ contribution margin = $8,000.00 ÷ $27.00 = 296.30, rounded up to 297.
  3. Units for the target profit = (fixed costs + target profit) ÷ contribution margin = $10,000.00 ÷ $27.00, rounded up to 371.
  4. Margin of safety = expected units − break-even units = 500 − 297 = 203: sales could fall 40.6% before you'd stop covering costs.

For planning and estimates only. This calculator doesn't replace advice from a CPA, enrolled agent or other tax professional.

How it works

  1. 1

    Enter fixed costs

    Costs that don't change with sales over the period: rent, salaries, insurance, software.

  2. 2

    Enter price and variable cost

    The selling price per unit and what each unit costs to make or deliver.

  3. 3

    Read the results

    Contribution margin, break-even units and revenue, and the sales needed for your target profit.

The formulas

  • Contribution margin per unit = price − variable cost per unit.
  • Break-even units = fixed costs ÷ contribution margin per unit.
  • Break-even revenue = fixed costs ÷ contribution margin ratio.
  • Units for a target profit = (fixed costs + target profit) ÷ contribution margin per unit.

Getting the inputs from your books

Start from a profit and loss statement. Sort each expense into fixed or variable. Cost of goods sold, merchant fees and sales commissions are usually variable; rent, salaries and subscriptions are usually fixed. Some costs are mixed; split them as best you can.

Frequently asked questions

What is contribution margin?

Price minus variable cost per unit. It's what each sale contributes toward fixed costs, then profit. The contribution margin ratio is that amount divided by the price.

Why are units rounded up?

You can't sell part of a unit, and selling one unit fewer than break-even means a loss.

What if my business sells services or many products?

Use an average price and variable cost per sale, or per billable hour. For revenue only, the break-even revenue figure (fixed costs ÷ contribution margin ratio) works without units.

What is the margin of safety?

How far expected sales can fall before you reach break-even, in units and as a percent of expected sales.

What if variable cost is higher than the price?

Each sale loses money, so there's no break-even point. The calculator says so instead of showing a number.

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