⚖️ Break-Even Point Calculator
By ToolNimba Finance Team · Reviewed by ToolNimba Editorial Review, small-business finance content · Updated 2026-06-19
This calculator gives a simplified estimate for planning only. A real break-even point depends on your exact cost classification, sales mix across products, taxes, financing costs, seasonality and how costs behave at different volumes. The result is not financial or accounting advice, confirm the figures with your own records and speak to a qualified accountant before making business decisions.
The break-even point is the sales volume at which your total revenue exactly covers your total costs, so you make neither a profit nor a loss. Knowing it tells you the minimum you must sell to stop losing money. Enter your fixed costs, the variable cost to make or buy one unit, and the price you sell each unit for, and this calculator shows the break-even point in both units and revenue, plus the contribution each unit makes.
What is the Break Even Calculator?
Break-even analysis splits your costs into two groups. Fixed costs stay roughly the same no matter how much you sell: rent, salaries, insurance, software subscriptions. Variable costs rise and fall with output: materials, packaging, payment fees, the cost of goods you resell. The gap between your selling price and the variable cost of one unit is the contribution margin, the amount each sale contributes toward covering the fixed costs and, eventually, profit.
The logic is simple. Each unit you sell throws off one contribution margin. You keep selling until those contributions have added up to the whole fixed-cost pile. At that moment you have broken even. So break-even units = fixed costs divided by the contribution margin per unit. Multiply that by the price and you get the break-even point expressed in revenue (sales dollars) instead of units.
There is one situation where no answer exists. If your selling price is less than or equal to your variable cost per unit, the contribution margin is zero or negative, meaning every sale loses money or merely treads water. No volume of sales will ever cover the fixed costs, so the business can never break even at that price. The fix is structural: raise the price, cut the variable cost per unit, or both, until each unit earns a positive contribution.
When to use it
- Working out the minimum number of units a new product must sell before it stops losing money.
- Pricing a product by testing how a higher or lower price changes the volume you need to break even.
- Deciding whether a fixed cost (new hire, bigger lease, machine) is worth the extra sales it demands.
- Pitching to a lender or investor with a clear, defensible break-even figure for the business plan.
How to use the Break Even Calculator
- Enter your total fixed costs for the period (rent, salaries, insurance and other costs that do not change with volume).
- Enter the variable cost to produce or buy one unit (materials, packaging, per-sale fees).
- Enter the price you sell one unit for.
- Read off the break-even point in units, the matching revenue, and the contribution margin per unit.
Formula & method
Worked examples
A workshop has $12,000 in fixed costs. Each item costs $10 to make and sells for $25.
- Contribution margin = 25 − 10 = $15 per unit
- Break-even units = 12,000 ÷ 15 = 800 units
- Break-even revenue = 800 × 25 = $20,000
Result: Break even at 800 units, which is $20,000 in revenue. Each unit beyond that adds $15 profit.
A side business has $5,000 in fixed costs. Each unit costs $3 and sells for $8.
- Contribution margin = 8 − 3 = $5 per unit
- Break-even units = 5,000 ÷ 5 = 1,000 units
- Break-even revenue = 1,000 × 8 = $8,000
Result: Break even at 1,000 units, which is $8,000 in revenue.
A reseller buys stock for $9 per unit and sells it for $9. Fixed costs are $4,000.
- Contribution margin = 9 − 9 = $0 per unit
- With zero contribution, no number of sales chips away at the fixed costs
- Break-even units = 4,000 ÷ 0, which is undefined
Result: The business never breaks even at this price. The price must rise above $9 (or the cost must fall) to earn a positive contribution.
How price affects break-even units and revenue (fixed costs $10,000, variable cost $30 per unit)
| Price per unit | Contribution margin | Break-even units | Break-even revenue |
|---|---|---|---|
| $40 | $10 | 1,000 | $40,000 |
| $50 | $20 | 500 | $25,000 |
| $60 | $30 | 334 | $20,040 |
| $80 | $50 | 200 | $16,000 |
| $30 (= cost) | $0 | Never | Not possible |
Common mistakes to avoid
- Mixing fixed and variable costs together. The whole method depends on separating costs that change with volume from those that do not. Lumping a per-unit shipping cost into the fixed pile, or treating rent as variable, throws off the contribution margin and gives a misleading break-even point.
- Forgetting your own salary or owner pay. Many small operators leave their own wage out of fixed costs, so the calculator says they break even while they are actually working for free. If you need to be paid, include that pay as a fixed cost.
- Pricing at or below the variable cost. If the price does not clear the variable cost per unit, the contribution margin is zero or negative and the business can never break even, no matter how much it sells. More volume only deepens the loss.
- Treating break-even as the goal. Break-even is the floor, not the target. It is where profit begins. Plan to sell comfortably above it so there is a margin of safety for slow months and surprises.
Glossary
- Break-even point
- The sales volume at which total revenue equals total costs, so there is neither profit nor loss.
- Fixed costs
- Costs that stay broadly the same regardless of how much you produce or sell, such as rent, salaries and insurance.
- Variable cost per unit
- The cost that is incurred for each additional unit made or sold, such as materials, packaging and per-sale fees.
- Contribution margin
- The selling price minus the variable cost per unit, the amount each sale contributes toward fixed costs and profit.
- Margin of safety
- How far current or expected sales sit above the break-even point, a buffer against a downturn.
Frequently asked questions
What is the break-even formula?
Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The denominator is the contribution margin per unit. Multiply the break-even units by the price to express the break-even point as revenue instead of units.
What is the difference between fixed and variable costs?
Fixed costs do not change with how much you sell, for example rent, salaries and insurance. Variable costs rise and fall with output, for example materials, packaging and per-sale payment fees. Separating the two correctly is essential for an accurate break-even point.
What is contribution margin?
Contribution margin is the selling price of one unit minus its variable cost. It is the amount each sale contributes toward covering your fixed costs, and once the fixed costs are covered, toward profit. A higher contribution margin means a lower break-even point.
What if the price is lower than the cost per unit?
If the selling price is at or below the variable cost per unit, the contribution margin is zero or negative, so every sale loses money or breaks even per unit. In that case there is no break-even point at all, you must raise the price or cut the variable cost before any volume can cover the fixed costs.
Why does the calculator round break-even units up?
You cannot sell a fraction of a unit and still cover all costs, so the figure is rounded up to the next whole unit. Selling that whole number guarantees total revenue is at least equal to total costs.
Does the break-even point include profit or taxes?
The basic break-even point is purely the no-profit, no-loss volume and ignores taxes and any target profit. To find the volume for a profit goal, add the desired profit to the fixed costs before dividing by the contribution margin. Taxes apply to profit above break-even.
Sources
- Break-Even Analysis: Definition and How to Calculate and Use It , Investopedia
- Break-Even Point , U.S. Small Business Administration