Break-Even Calculator
Calculate the sales volume needed to cover all costs and start making profit.
Break-even calculations are for planning purposes only. Actual results depend on market conditions, pricing strategy, and cost management. Consult a financial advisor for business planning.
Rent, salaries, subscriptions
Materials, shipping per unit
How many units to sell to reach this profit
Break-Even Units
Break-Even Revenue
Contribution Margin
Gross Margin
To Reach $ Profit
Units Required
Revenue Required
Profit at Various Sales Volumes
| Units Sold | Revenue | Total Cost | Profit / Loss |
|---|---|---|---|
How It Works
Enter your fixed costs, variable cost per unit, and selling price per unit. The calculator shows your break-even point in units and revenue, plus a profit/loss chart across different sales volumes.
**Break-Even Calculator — Know Exactly When You Start Making Money**
Break-even analysis is one of the most fundamental calculations in business. It tells you the minimum sales volume required to cover all your costs — the point where you transition from loss to profit. Every entrepreneur, product manager, and financial analyst should understand this calculation.
**The Break-Even Formula**
Break-Even Point (units) = Fixed Costs / (Selling Price − Variable Cost per Unit)
The denominator (Selling Price − Variable Cost) is called the Contribution Margin — the amount each unit sold contributes toward covering fixed costs and generating profit.
Example:
- Fixed Costs: £5,000/month (rent, salaries, software)
- Selling Price: £25 per unit
- Variable Cost: £10 per unit (materials, packaging, shipping)
- Contribution Margin: £25 − £10 = £15
- Break-Even Point: £5,000 / £15 = 334 units/month
**Fixed vs. Variable Costs**
*Fixed costs* don't change with production volume:
- Rent and utilities
- Staff salaries
- Software subscriptions
- Insurance
- Loan repayments
*Variable costs* change proportionally with output:
- Raw materials
- Packaging
- Shipping and fulfilment
- Sales commissions
- Payment processing fees
**Break-Even in Revenue**
Break-Even Revenue = Fixed Costs / ((Selling Price − Variable Cost) / Selling Price)
= Fixed Costs / Contribution Margin Ratio
**Why Break-Even Analysis Matters**
*New product launches* — Before investing in production capacity, calculate whether realistic sales volumes can achieve break-even in a reasonable timeframe.
*Pricing decisions* — Lowering prices reduces the contribution margin and raises the break-even point. This tool shows exactly how much more you need to sell to compensate for a price reduction.
*Cost reduction* — Reducing fixed or variable costs lowers the break-even point. This tool quantifies the impact of any cost reduction.
*Business survival planning* — During downturns, knowing your break-even point tells you the minimum revenue needed to survive.
**Break-Even Limitations**
1. Assumes a single product (or constant product mix) — multi-product businesses need a weighted average contribution margin.
2. Assumes selling price and variable cost per unit are constant — discounts and bulk pricing complicate this.
3. Doesn't account for cash flow timing — you may need to fund losses before reaching break-even.
4. Fixed costs may change at different production levels (step costs).
**Margin of Safety**
Margin of Safety = Current Sales − Break-Even Sales
This tells you how far sales can fall before you start losing money. A larger margin of safety means your business is more resilient to downturns.