Use this break-even calculator to find the sales volume needed to cover fixed and variable costs. Enter fixed costs, price per unit, variable cost per unit, and optional target profit. The calculator returns contribution margin, break-even units, break-even revenue, and the units and revenue needed to reach the target profit.
Formula
The target-profit formula uses contribution margin, not price plus variable cost. If price is less than or equal to variable cost, there is no finite break-even point because each sale does not contribute enough to cover fixed costs.
Example
Suppose fixed costs are $5,000, price per unit is $50, variable cost per unit is $30, and target profit is $2,000.
At 250 units, the business covers fixed and variable costs. At 350 units, it reaches the $2,000 target profit before considering taxes, financing costs, or other non-operating items.
Common mistakes
- Using total variable costs instead of variable cost per unit.
- Adding price and variable cost in the denominator instead of subtracting variable cost from price.
- Forgetting that rounded units should usually be rounded up because partial units may not be sellable.
- Treating break-even output as a forecast instead of a cost-volume-profit threshold.
How to Use the Break-Even Calculator
Enter fixed costs, selling price per unit, variable cost per unit, and optional target profit. The calculator returns contribution margin, break-even units, break-even revenue, and the units needed for the target profit.
Enter fixed costs.
Use fixed costs for the same period you want to analyze, such as monthly rent, salaries, insurance, and software commitments.
Enter unit economics.
Add the selling price per unit and variable cost per unit. The calculator subtracts variable cost from price to calculate contribution margin.
Add target profit if needed.
Leave target profit at zero for pure break-even analysis, or enter a profit target to calculate the units needed above break-even.
Review the result.
Use exact units for modeling and rounded units for operating targets. If price does not exceed variable cost, fix pricing or cost assumptions before relying on the result.
Frequently Asked Questions
These FAQs explain contribution margin, break-even units, break-even revenue, and target-profit calculations.
What is a break-even point?
The break-even point is the sales level where total revenue equals total costs, so profit is zero. Above that level, each additional unit contributes profit after variable costs.
What formula does the calculator use?
Break-even units = fixed costs / contribution margin per unit, where contribution margin per unit = price per unit - variable cost per unit.
How do I calculate units for a target profit?
Units for target profit = (fixed costs + target profit) / contribution margin per unit. The denominator is price per unit minus variable cost per unit.
What if price is less than or equal to variable cost?
There is no finite break-even point because each unit does not contribute enough to cover fixed costs. Review pricing, variable costs, or the business model before using the result.
The Break Even Calculator uses the standard cost-volume-profit (CVP) formulas. The core input method assumes you enter fixed costs, unit price, and unit variable cost. The calculator then computes the contribution margin (Price – Variable Cost) and divides fixed costs by this margin to find the break-even volume in units. The break-even revenue is simply that unit figure multiplied by the price (or equivalently, fixed costs divided by the contribution margin ratio).
If a target profit is provided, the formula adds the target profit to fixed costs before dividing by the contribution margin, yielding the sales needed for that profit level. All calculations assume a linear relationship between cost and volume and that unit prices/costs remain constant over the relevant range.
Assumptions & edge cases. This model assumes that all fixed costs are truly fixed within the period of analysis, and all variable costs are constant per unit. It doesn’t account for potential step-changes in fixed costs (e.g., needing a new facility if you scale up) or volume discounts.
We assume every unit produced is sold. If the computed break-even units is not a whole number, in practice one would round up to the next unit to cover the shortfall. If the price per unit is less than or equal to the variable cost per unit, then technically no finite break-even point exists (each sale would incur a loss).
Also, while break-even analysis tells you when you will stop losing money, it does not tell you if reaching that point is feasible (market demand could be lower than break-even volume) or how long it will take.
There are no universal “good” or “bad” break-even levels – they must be judged relative to the market and business context. Companies with high operating leverage (high fixed costs) typically have higher break-even points but can scale profits faster beyond that point, whereas companies with more variable costs have lower break-even thresholds but less profit per additional sale. Use break-even outputs as guideposts in conjunction with market analysis and risk assessment.
Sources & Methodology