Break-Even Calculator
Enter your fixed costs, price per unit and variable cost per unit to find how many units you must sell to break even.
Updated
Break-Even Calculator
Our Break-Even Calculator shows how many units you need to sell before your sales cover all your costs. Enter your fixed costs, the selling price per unit and the variable cost per unit to get the break-even point in units, the break-even sales in money, the contribution margin and the markup. It is useful for small business owners, startups planning a launch, students of accounting and anyone testing a price.
Quick answer
Break-even point in units is fixed costs ÷ (price per unit − variable cost per unit): $30,000 ÷ ($120 − $70) = 600 units.
- Contribution per unit: price − variable cost ($50)
- Break-even sales: units × price (600 × $120 = $72,000)
- Round up: 833.33 units means selling 834
- No break-even: if price is not above variable cost
What Is the Break-Even Point?
The break-even point is the sales level where total revenue equals total cost, so the business makes neither a profit nor a loss. Below it, every period ends with a loss. Above it, every extra unit sold adds profit.
It depends on two kinds of cost:
- Fixed costs stay the same whatever you sell: rent, salaries, insurance, software subscriptions.
- Variable costs rise with every unit: materials, packaging, shipping, card fees, sales commission.
Each sale earns a contribution (price minus variable cost) that goes toward paying the fixed costs. Once enough contributions add up to the fixed costs, you have broken even.
How to Calculate the Break-Even Point
- F: total fixed costs for the period
- P: selling price per unit
- V: variable cost per unit
- CM ratio (contribution margin ratio): (P − V) ÷ P
- Find the contribution per unit. $120 price − $70 variable cost = $50.
- Divide the fixed costs by it. $30,000 ÷ $50 = 600 units.
- Turn units into sales. 600 × $120 = $72,000, the same as $30,000 ÷ ($50 ÷ $120).
- Round up if needed. You cannot sell part of a unit, so 833.33 becomes 834.
Break-Even Chart
The total cost line starts at the fixed costs ($30,000) and climbs by $70 per unit. The revenue line starts at zero and climbs faster, by $120 per unit. Left of the crossing the business makes a loss; right of it, the gap between the lines is profit.
Break-Even Examples
| F, P, V | Units | Sales |
|---|---|---|
| $6,000, $25, $10 | 400 | $10,000 |
| $18,000, $40, $28 | 1,500 | $60,000 |
| $30,000, $120, $70 | 600 | $72,000 |
| $50,000, $150, $90 | 834 | $125,000 |
In the last row the exact break-even point is 833.33 units, so 834 must be sold to cover every cost. The break-even sales figure uses the exact 833.33.
What Changes the Break-Even Point?
Starting from $30,000 fixed costs, a $120 price and a $70 variable cost (600 units):
| Change | New BEP |
|---|---|
| Price up $10 to $130 | 500 units |
| Variable cost up $10 to $80 | 750 units |
| Fixed costs up to $36,000 | 720 units |
A higher price or a lower variable cost widens the contribution and lowers the break-even point. Higher fixed costs raise it in direct proportion: 20% more fixed costs means 20% more units.
Units for a Target Profit
To earn a $10,000 profit in the example above, the business needs ($30,000 + $10,000) ÷ $50 = 800 units. You can get the same answer here by adding the target profit to the fixed costs field.
Common Mistakes
- Mixing fixed and variable costs. Shipping and card fees are variable even if they feel like overhead.
- Mismatched periods. Monthly fixed costs give a monthly break-even point; do not divide a year of rent by one month of sales.
- Rounding down. 833.33 units means 834; 833 still leaves a small loss.
- Confusing margin and markup. A $60 contribution on a $150 price is a 40% margin but a 66.67% markup on the $90 cost.
Key Terms
- BEP
- Break-even point, where profit is 0.
- Contribution
- Price − variable cost per unit.
- CM ratio
- Contribution ÷ price, as a percentage.
- Markup
- Contribution ÷ variable cost.
- Margin of safety
- Sales above the break-even point.
How to Use the Break-Even Calculator
- Enter the fixed costs. Add up the costs that stay the same whatever you sell, such as rent, salaries and insurance, and type the total for the period, such as 30,000. Commas and a currency sign are fine.
- Enter the price and variable cost per unit. Type the selling price of one unit, such as 120, and what each unit costs to make and sell, such as 70.
- Read and copy the result. The break-even point in units appears as you type, with the working, the whole units to sell, the break-even sales, the contribution margin and the markup. Press Copy to copy it, or Clear or Esc to start again.
Example: a candle maker pays $6,000 a year in fixed costs, sells candles for $25 and spends $10 making each one. Enter 6000, 25 and 10. The result is 400 candles, or $10,000 of sales.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate the break-even point?
Divide the fixed costs by the contribution per unit (price minus variable cost): BEP = F ÷ (P − V). With $30,000 of fixed costs, a $120 price and a $70 variable cost, the break-even point is $30,000 ÷ $50 = 600 units.
How do you find break-even sales in dollars?
Multiply the break-even units by the price, or divide the fixed costs by the contribution margin ratio. 600 units × $120 = $72,000, the same as $30,000 ÷ ($50 ÷ $120).
What if the break-even point is not a whole number?
Round up, because you cannot sell part of a unit. $50,000 ÷ ($150 − $90) = 833.33, so you need to sell 834 units to cover all costs. The calculator shows this as Units to sell.
What is the difference between margin and markup?
Both use the same contribution, but margin divides it by the price and markup divides it by the cost. A $150 price and a $90 cost give a $60 contribution, a 40% margin and a 66.67% markup.
Why does the calculator say I cannot break even?
The price per unit must be higher than the variable cost per unit. If each sale costs as much as it brings in, or more, no number of sales will ever pay off the fixed costs.
How do I find the units needed for a target profit?
Add the target profit to the fixed costs and divide by the contribution per unit: ($30,000 + $10,000) ÷ $50 = 800 units. In this calculator, enter 40,000 as the fixed costs.
Does a lower break-even point mean a better business?
Usually it means less risk, because fewer sales are needed before profit starts. It is still worth comparing it with your realistic sales forecast; the gap between the two is your margin of safety.
Is the Break-Even Calculator free?
Yes. It is completely free, needs no sign-up, and can be used as many times as you like.
Sources
- OpenStax, Principles of Accounting, Volume 2. 3.2 Calculate a Break-Even Point in Units and Dollars.
- Corporate Finance Institute. Break-Even Analysis: How to Calculate the Break-Even Point.
- Wall Street Prep. Break-Even Analysis: Formula + Calculator.
- U.S. Small Business Administration. Calculate your startup costs (includes break-even analysis).
Try our Break-Even Calculator to see how many sales it takes to cover your costs.