The break-even calculator finds the sales volume at which
contribution margin exactly covers fixed costs. Enter fixed costs for
one period, selling price per unit and variable cost per unit. The tool
returns contribution margin, break-even units, break-even revenue and
units required for an optional target operating profit.
Calculate your break-even point
Use one currency for all amounts. Changing currency only changes the display; it does not convert amounts. Leave optional fields blank if you do not need those results.
How to use the calculator
Use amounts from the same period and business scope. Monthly fixed
costs should be paired with monthly expected units. Selling price should
exclude sales tax collected for an authority. Variable cost should
include costs that rise with each additional unit, such as materials,
transaction fees, commissions and per-unit fulfillment.
Enter a target profit only when you want a sales requirement above
break-even. The calculator rounds unit results up because a fraction of
a physical product normally cannot be sold.
What results does it
calculate?
Contribution margin per unit is selling price minus variable cost.
The contribution-margin ratio is that amount divided by selling
price.
The calculator then uses:
Break-even units = fixed costs ÷ contribution margin per
unit
Theoretical break-even revenue = unrounded break-even units × selling price
Revenue at whole units = break-even units rounded up × selling price
With $100 fixed costs, a $30 selling price and $12 variable cost, theoretical volume is 100 ÷ 18 = about 5.56 units and theoretical revenue is $166.67. You must sell 6 whole units, generating $180 of revenue.
Target-profit units = (fixed costs + target profit) ÷
contribution margin per unit
It also estimates profit at an entered sales volume and the margin of
safety between expected sales and break-even sales.
Worked calculator example
Assume monthly fixed costs of $18,000, a selling price of $60 and
variable cost of $36. Contribution margin is $24 per unit and the ratio
is 40%. Break-even volume is 750 units, representing $45,000 of
sales.
If the target operating profit is $12,000, required volume becomes ($18,000 + $12,000) ÷ $24 = 1,250 units. At an expected 1,400 units, estimated operating profit is $15,600 and the unit margin of safety is 650.
Why does the
calculator show no break-even result?
If variable cost equals selling price, each sale contributes zero
toward fixed costs. If variable cost is higher, each additional sale
increases the loss under the model. A finite break-even point therefore
does not exist until price rises or variable cost falls.
The result can also be invalid when selling price is zero or an input
is missing. Do not replace an unknown input with zero; estimate a
supported range and run multiple scenarios instead.
How should mixed costs be
entered?
Split a mixed cost into fixed and variable portions when practical. A
payment processor’s monthly platform fee is fixed, while its percentage
fee is variable. A vehicle lease may be fixed within a mileage allowance
and partly variable above it.
Step costs require scenarios. If a second facility becomes necessary
above 10,000 units, calculate one break-even point below that capacity
and another with the higher fixed-cost base. The simple formula does not
choose a capacity plan automatically.
What if the
business sells several products?
Use a weighted average contribution margin based on the expected
sales mix. For example, if two products are expected to represent 60%
and 40% of units, weight their unit contributions accordingly. If
products use very different units or prices, a revenue-based
contribution-margin ratio can be clearer.
The result remains sensitive to the mix. Run a lower-margin scenario
rather than assuming the most profitable product will retain its
share.
Break-even is not cash
break-even
The operating calculation may include non-cash expenses such as
depreciation and may omit loan principal, tax, working-capital needs and
startup investment. A separate cash-flow plan is required to know
whether the company can pay its bills.
Use the calculator as a decision model. Test price cuts, supplier
increases, commissions, hiring and capacity changes before accepting the
displayed result as a sales target. Document each assumption so the
calculation can be updated when actual costs change.
