How to use the break-even calculator
- Choose Break-even units to see how many units you must sell at a set price, or Break-even price to find the lowest price that covers your costs at a planned volume.
- Enter your Fixed costs ($) for one period, such as a month: rent, salaries, insurance, software.
- Enter the Variable cost per unit ($): materials, packaging, shipping, payment fees, anything that grows with each sale.
- In units mode, enter your Price per unit ($). In price mode, enter the Units you expect to sell instead.
- Read the result, then use the table underneath to see how a different price or volume shifts it.
How the break-even point is calculated
Each unit you sell contributes its price minus its variable cost toward your fixed costs. That leftover is the contribution margin, and you break even when the total contribution equals the fixed costs.
Break-even units = Fixed costs / (Price - Variable cost)
Break-even price = Fixed costs / Units + Variable cost
Fixed costs divided by the contribution margin ratio (contribution divided by price) give break-even revenue. The calculator rounds units up to whole units and a break-even price up to the next cent, so you really cover your costs. This is standard cost-volume-profit analysis, as taught in OpenStax Managerial Accounting.
Worked example with the default numbers
Fixed costs are $10,000, the price is $25 and the variable cost is $10. Each sale contributes $25.00 - $10.00 = $15.00, a contribution margin of 60.0%. Then $10,000 / $15.00 = 666.67, so you break even at 667 units, which bring in 667 x $25.00 = $16,675.00 (exactly $16,666.67 before rounding up to whole units). In Break-even price mode with 800 units expected, $10,000 / 800 = $12.50 of fixed cost per unit, plus the $10.00 variable cost, gives a break-even price of $22.50.
Limits and edge cases
- If the price is not above the variable cost, every sale loses money and there is no break-even point, so the tool warns you instead of showing a number.
- The model has one product at one price. For a mix, use the weighted average price and variable cost. To add a target profit and daily sales goals, try the break-even sales calculator.
- Fixed costs are only fixed within a range. If selling 667 units means hiring someone or renting more space, the break-even point moves.
- Break-even is about profit, not cash. It ignores income tax, loan payments, discounts, returns and payment timing.
- To turn units into time, divide by the units you sell each month: at 100 a month, 667 units takes about 6.7 months. Check that your price leaves enough room with the profit margin calculator.
Break-even questions people ask
How do you calculate the break-even point?
Divide fixed costs by the contribution margin per unit, which is the price minus the variable cost. With $10,000 of fixed costs, a $25 price and a $10 variable cost, the margin is $15, and $10,000 divided by $15 is 666.67, so you need 667 units.
How do you find the break-even price?
Divide fixed costs by the units you expect to sell, then add the variable cost per unit. For $10,000 of fixed costs, 800 units and a $10 variable cost, that is $10,000 divided by 800, plus $10, which is $22.50.
What is the difference between break-even units and break-even revenue?
Break-even units is how many items you must sell. Break-even revenue is what those sales bring in, which is units multiplied by price: $16,675.00 for 667 units at $25, or $16,666.67 if you skip rounding up to whole units.
What if my variable cost is higher than my price?
You cannot break even, because every sale loses money before fixed costs are counted. Raise the price, cut the variable cost, or both.
Should fixed costs be monthly or yearly?
Either works if you stay consistent. Monthly fixed costs give break-even units per month, and yearly fixed costs give units per year. In price mode, enter units for that same period.
Source: OpenStax, Principles of Accounting, Volume 2: Managerial Accounting, section 3.2, Calculate a Break-Even Point in Units and Dollars.