Break-even calculator
This break-even calculator shows how many units you need to sell, and how much revenue that is, before your business stops losing money. Enter your fixed costs, your price and your variable cost per unit. Add expected sales to see your margin of safety.
How the break-even point is calculated
The break-even point is where total revenue equals total costs, so profit is zero. Every unit you sell earns its contribution margin, which is the price minus the variable cost of that unit. Fixed costs stay the same however much you sell, so you divide them by the contribution margin:
Break-even units = fixed costs ÷ (price − variable cost per unit)Break-even revenue is those units times your price. The contribution margin ratio, the share of each sale left after variable costs, gives you the same answer in money: fixed costs divided by that ratio.
A worked example
Say your fixed costs are 12,000 a month, you sell at 80 and each unit costs you 35 in materials and shipping. Each sale contributes 45. You need 12,000 ÷ 45 = 266.7, so 267 units a month, or about 21,333 in revenue, before you make any profit. If you expect to sell 400 units, your margin of safety is about 33%: sales could drop by a third before you start losing money.
What the number does not tell you
Break-even assumes your price and your variable cost stay the same at every volume, and that the line between fixed and variable costs is clean. In practice, discounts, volume pricing and step costs (a second warehouse, another hire) move the point. For a business with several products, use a weighted average contribution margin, or better, calculate break-even per product line.
If you run this every month by hand from your accounting package, that is exactly the kind of number a live dashboard can keep current for you. See the CFO dashboard example or how I build live data dashboards.
Break-even calculator: questions answered
Need this number live, every month? Ask me, I reply within a few hours on working days.
What is a break-even point?
A 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. Below it each month loses money; above it, every extra unit adds its contribution margin to profit. You can express it in units sold or in revenue.
What is the break-even formula?
Break-even units equal fixed costs divided by the contribution margin per unit, which is the selling price minus the variable cost per unit. Break-even revenue equals fixed costs divided by the contribution margin ratio, or simply break-even units multiplied by the price.
What counts as a fixed cost and what as a variable cost?
Fixed costs stay the same whatever you sell in the period: rent, salaries, insurance, software subscriptions. Variable costs rise with each unit sold: materials, packaging, shipping, payment and marketplace fees, sales commission. Some costs are mixed; split them as well as you can, because the split drives the result.
What is the margin of safety?
The margin of safety is how far your expected sales are above the break-even point, as a share of expected sales. A 30% margin of safety means sales could fall by 30% before you start losing money. It is a quick measure of how much room you have if a month goes badly.
Is my data stored when I use this calculator?
No. The calculator runs entirely in your browser. The numbers you type are not sent to a server, not stored and not tracked. Close the page and they are gone.