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Pricing & profit / Break-Even Calculator

Break-Even Calculator

The units and sales you need to cover your fixed costs, and what it takes to reach a profit target.
$

Enter a number of at least 0

Costs that don't change with sales for the period: rent, salaries, insurance, software.

$

Enter a number of at least 0

$

Enter a number of at least 0

Materials, packaging, card fees and anything else you pay for each unit sold.

$

Enter a number of at least 0

Optional. Profit you want on top of breaking even.

Break-even point
200 units
$10,000.00break-even sales
$30.00contribution per unit
60.0%contribution margin
$0price per unit $50.00
  • Variable cost
  • Contribution to fixed costs
Price per unit$50.00
Variable cost per unit−$20.00
Contribution per unit$30.00
Fixed costs to cover$6,000.00
Units to break even200
Sales to break even$10,000.00
Units for $3,000.00 profit300
Sales for $3,000.00 profit$15,000.00

Each unit adds $30.00 toward fixed costs. Every unit after number 200 is profit.

See breakdown

How the break-even calculation works

  1. Contribution is price minus variable cost

    A $50 product that costs $20 to make and ship leaves $30 per unit to pay fixed costs.

  2. Break-even units = fixed costs ÷ contribution

    $6,000 ÷ $30 = 200 units. Partial units are rounded up, since you can't sell part of one.

  3. Break-even sales = fixed costs ÷ contribution margin

    $30 is 60% of $50, so $6,000 ÷ 0.60 = $10,000 in sales.

  4. Add a profit target to fixed costs

    For $3,000 profit you need ($6,000 + $3,000) ÷ $30 = 300 units, or $15,000 in sales.

Worked example. Fixed costs are $6,000 a month, the price is $50 and the variable cost is $20. Each unit contributes $30, so you break even at 200 units or $10,000 in sales. A $3,000 profit takes 300 units ($15,000).

Break-Even FAQ

What is the break-even point?

The level of sales where total revenue equals total costs, so profit is zero. Below it you lose money; each unit sold above it adds its contribution to profit.

What is the break-even point formula?

Break-even units = fixed costs ÷ (price per unit − variable cost per unit). $6,000 ÷ ($50 − $20) = 200 units, rounded up to a whole unit.

How do I calculate break-even sales in dollars?

Divide fixed costs by the contribution margin ratio. With a 60% ratio, $6,000 ÷ 0.60 = $10,000 in sales.

What counts as a fixed cost?

Anything you pay regardless of how much you sell in the period: rent, salaried wages, insurance, loan payments and subscriptions.

What if my price is lower than my variable cost?

Then there is no break-even point. Each sale loses money, so selling more makes the loss bigger.

What is the margin of safety?

How far your sales can fall before you reach break-even: (actual sales − break-even sales) ÷ actual sales. At 300 units ($15,000) and a $10,000 break-even, the margin of safety is $5,000, or 33.3%.

How can I lower my break-even point?

Raise the price, cut the variable cost per unit or reduce fixed costs. A higher contribution per unit has the biggest effect.

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