Break-Even Calculator

Contribution margin per unit = unit price − unit variable cost; contribution margin percent = contribution margin per unit ÷ unit price × 100; break-even units = fixed costs ÷ contribution margin per unit; break-even revenue = break-even units × unit price

Fixed costs

Everything you pay whether or not a single unit sells: rent, salaries, insurance, the licence, the software subscription. They are the quantity being covered, so the whole answer scales with them — double the fixed costs and the break-even volume doubles with it.

Unit price

What one unit sells for. It sets the revenue side of the contribution and it is also the denominator of the contribution margin percent, which is why it cannot be zero.

Unit variable cost

What one more unit costs you to make or buy — the materials, the purchase price, the payment fee on that sale. Only costs that move with the volume belong here; anything you pay regardless is a fixed cost, and putting it in this field instead would understate the break-even point.

Contribution margin per unit

Unit price minus unit variable cost. It is what each sale hands over towards the fixed costs, and it is the reason this page is not simply fixed costs divided by price: a sale at 100 that costs 90 to fill contributes 10, not 100.

Contribution margin percent

The contribution as a share of the price. It is the fastest way to see how much revenue a fixed cost needs — a 10 percent margin means every 1 of fixed cost requires 10 of sales, while a 40 percent margin needs 2.50.

Break-even units

Fixed costs divided by the contribution per unit: how many units have to sell before the business is level. Below it every sale still narrows the loss, so it is a target to reach rather than a cliff to fall off.

Break-even revenue

The same point read as money — the break-even quantity at the unit price. It is the turnover the business has to reach, and it is the reading most people actually want when the question is about a month rather than a product.

Use it when the price and the cost structure are known and the volume is the open question: a new product before the first order, a shop deciding whether the rent is affordable at the prices it can charge, a month whose targets have to be set. It is the mirror of the profit page in this batch — same three inputs and one rearrangement, and the giveaway is which number you do not have. Three things worth knowing before you read the answer. The two outputs are one point, not two tests: satisfying the unit target satisfies the revenue target automatically. The quantity is not rounded up for you, so a break-even of 125.03 units means 126 whole units in practice, and the small shortfall that comes from stopping at 125 is not an arithmetic error. And the answer is a statement about your costs, not about your market: it says how much has to sell, never whether it will.

1. A 5,000 fixed cost, sold at 100 and costing 60

   1. Contribution per unit: 100 − 60 = 40
   2. Contribution margin: 40 ÷ 100 = 40 percent
   3. Break-even units: 5,000 ÷ 40 = 125
   4. Break-even revenue: 125 × 100 = 12,500

   The same numbers the profit calculator starts from, and it is worth seeing why they agree: at 125 units that page reports a profit of exactly zero. The two readings of the answer are the useful part here. Selling 125 units and taking 12,500 are the same achievement, so whichever one your own targets are written in, the other is implied.

2. A thin margin: the same 5,000, but the unit costs 90

   1. Contribution per unit: 100 − 90 = 10
   2. Contribution margin: 10 ÷ 100 = 10 percent
   3. Break-even units: 5,000 ÷ 10 = 500
   4. Break-even revenue: 500 × 100 = 50,000

   A ten percent margin is the whole story of this example: the same 5,000 of fixed costs now needs four times the volume and four times the revenue of the example above, because each sale only hands over a tenth of its price. Businesses with thin margins do not fail because the margin is thin on its own — they fail because a thin margin multiplies the volume needed to cover a fixed cost that did not get any smaller.

3. A break-even that does not land on a whole unit: 5,001 of fixed costs

   1. Contribution per unit: 100 − 60 = 40
   2. Break-even units: 5,001 ÷ 40 = 125.025, printed as 125.03
   3. Break-even revenue: 125.03 × 100 = 12,503

   One extra unit of fixed cost turns a tidy 125 into a fraction, and units do not come in fractions — so the practical target is 126 units, and 125 falls one unit of currency short. This is also the one place where this page and the profit page appear to disagree: enter 125.03 units there and the profit comes out at 0.20 rather than zero. Both pages are right, and neither of them rounds the quantity down to a whole number — 125.03 is this page's two-decimal rendering of 125.025, and that page returns exactly zero at the unrounded figure.

4. A penny of contribution: priced at 100.01 against a cost of 100

   1. Contribution per unit: 100.01 − 100 = 0.01
   2. Contribution margin: 0.01 ÷ 100.01 = 0.01 percent
   3. Break-even units: 1,000 ÷ 0.01 = 100,000
   4. Break-even revenue: 100,000 × 100.01 = 10,001,000

   There is nothing wrong with this business on paper — every sale is profitable — and it still has to move a hundred thousand units to cover a thousand of costs. A contribution this thin is what passes for a healthy price when only the price and the cost are compared, which is why the break-even point is worth computing even when the margin looks acceptable.

5. Nothing variable to pay: a unit cost of zero

   1. Contribution per unit: 100 − 0 = 100
   2. Contribution margin: 100 ÷ 100 = 100 percent
   3. Break-even units: 10,000 ÷ 100 = 100
   4. Break-even revenue: 100 × 100 = 10,000

   With nothing variable to pay, the whole price is contribution and the two readings of the answer collapse into the same number: 100 units, 10,000 of revenue, because each unit is worth exactly 100. That coincidence is a useful check on your own understanding — the units and the revenue differ only by the unit price, so they are equal exactly when the price is 1.

The answer is a target, not a forecast: it says how much has to sell, and it assumes all of it does. Nothing here models demand, competition or seasonality, so a break-even of 500 units tells you the size of the task rather than whether it is achievable. Costs are treated as a clean split between fixed and variable, and real businesses are full of costs that are neither — a supervisor hired at 400 units, a discount that grows with volume, a delivery charge that jumps at a weight threshold — so the true break-even is usually a step function rather than the single point printed here. The quantity is not rounded up, and it should be in practice. Every unit is assumed to sell at the same price, which discounts and returns break. And the figure covers the costs you entered and nothing else: tax on the profit, interest on borrowing and any overhead you left out of fixed costs all sit outside it, so a business at its break-even point is still not yet making money in the sense an accountant means.

Why are there two answers — units and revenue?

Because they are the same point described twice. Sell 125 units at 100 and you have taken 12,500; reach 12,500 of revenue and you have sold 125 units. There is no order to satisfy them in and no double counting: the break-even revenue is just the break-even quantity multiplied by the unit price. The reason both are shown is that people set their targets in different things — a maker thinks in units, a shop thinks in takings — so whichever one you work in, you should not have to convert it yourself.

Should I round the break-even quantity up?

Always, in practice. The calculator solves an equation and will happily report 125.03 units; you cannot sell a hundredth of a unit, so the honest target is 126. The gap matters more than it looks on a small scale: selling 125 against a break-even of 125.03 leaves the business slightly short of level, which is why the number is best read as a minimum rather than a goal. Where the answer lands on a whole unit already, as it does whenever the fixed costs divide evenly by the contribution, there is nothing to round.

What if the variable cost is higher than the price?

Then there is no break-even point at all, and this page will say so instead of printing a number. Every sale would hand over a negative contribution — each one adding to the loss rather than covering part of the fixed costs — so selling more moves the business further from level, not closer. That is not a data-entry mistake to work around; it is the arithmetic saying the price cannot be below the variable cost, and the fix is a different price or a different cost, not more volume.

Does the break-even point include tax and interest?

No, only the costs you enter. It measures the point at which revenue covers the operating costs in the two fields, so a business sitting exactly at break-even has not yet paid tax on anything, because there is no profit to tax, and has not yet serviced any debt unless those payments were entered as fixed costs. Whether they should be is a judgement call: a loan repayment is a real fixed outflow, but adding it moves the line from covering the business to covering the financing as well, and both questions are worth asking separately.

Is a lower break-even always better?

Usually, but not by itself. A low break-even means less has to sell before the business is level, which is genuine resilience — it is the same thing as a larger cushion against a bad month. What it does not tell you is whether the volume is reachable or whether the price that produced it is one customers will pay. A break-even of 20 units at a price nobody accepts is worse than a break-even of 200 at a price the market takes, and this page cannot see either side of that, because it does not model demand.

How is this different from the profit calculator?

The direction, and only that. Here you supply the costs and the price and it returns the volume; there you supply the volume as well and it returns the money left over. The arithmetic is one rearrangement of the same relationship, so the two pages agree wherever they can be compared — the profit page reports zero profit at the break-even quantity this page gives. Use this page when the volume is the open question and that one when the volume is already decided.

• Operating Expenses — which costs of running a business are not the cost of the goods, the line that decides whether a cost belongs in fixed costs or in the variable cost of a unit — Investor.gov, U.S. Securities and Exchange Commission (United States)
• Publication 535 (2025), Business Expenses — the tax treatment of the business expenses that are not the cost of goods sold, including the distinction between costs that vary with volume and costs that do not — Internal Revenue Service (United States)
• Profit — the definition of what is left once costs are covered, which is the condition the break-even quantity is solving for — Investor.gov, U.S. Securities and Exchange Commission (United States)