Break-Even Point Calculator
Find how many units you must sell — and the revenue that represents — before your business covers its fixed costs and starts earning a profit.
Reviewed by the CalcCafe editorial team · Last updated 18 July 2026 · How we test our tools
Example
Your business carries $50,000 of fixed costs per month, sells its product at $40 per unit, and each unit costs $25 in materials and direct labor. Contribution per unit is 40 − 25 = $15, a contribution margin of 37.5%. Break-even is 50,000 ÷ 15 = 3,333.33 units — call it 3,334 units sold — which equals about $133,333 of monthly revenue. Every unit after that adds $15 of profit.
How it works
Contribution per unit = price − variable cost: the money each sale contributes toward fixed costs. Break-even units = fixed costs ÷ contribution per unit, and break-even revenue = break-even units × price. Contribution margin % = contribution ÷ price × 100. If price does not exceed variable cost the contribution is zero or negative, every sale digs the hole deeper, and no volume breaks even — the tool shows zero in that case.
Good to know
Classifying costs correctly is half the analysis. Fixed costs stay the same regardless of volume over the period: rent, salaried staff, insurance, software subscriptions, loan payments, base utilities. Variable costs scale with each unit sold: raw materials, direct hourly labor, packaging, payment-processing fees, per-order shipping. Some costs are mixed — a utility bill with a base charge plus usage, or sales pay with salary plus commission — and should be split, with the fixed portion in fixed costs and the per-unit portion in variable cost.
Contribution-margin thinking is the mental shift the formula teaches: each sale does not earn profit at first, it contributes toward the fixed-cost pile. At a 37.5% margin, 37.5 cents of every revenue dollar goes to that pile until it is covered, and only then does the same 37.5 cents become profit. This is why high-contribution businesses (software, services) break even at low volume while thin-margin businesses (groceries, distribution) need enormous throughput to cover even modest fixed costs.
Once you know break-even, compute your margin of safety: how far current sales sit above it, expressed as a percentage of sales. Selling 4,000 units against a 3,334-unit break-even leaves a margin of safety of about 17% — demand can fall that far before losses begin. Break-even also reacts sharply to price: raising the price from $40 to $44 lifts the contribution to $19 and cuts break-even to about 2,632 units, a 21% drop from a 10% price rise. Discounting works just as powerfully in reverse, which is why blanket discounts are so dangerous for thin-margin businesses.
Know the model's limits. It assumes fixed costs are truly fixed, but in reality they step up — a second machine, a larger warehouse, another supervisor — once volume crosses a threshold, creating a new, higher break-even. It also assumes a single product with one price and one variable cost; multi-product businesses must use a weighted-average contribution margin based on their sales mix, and the break-even moves whenever the mix shifts. Treat the result as a planning benchmark to revisit whenever prices, costs or product mix change, not a one-time answer.
Frequently asked questions
How do I calculate the break-even point?
Divide fixed costs by the contribution per unit (price minus variable cost). With $50,000 of fixed costs, a $40 price and $25 variable cost, contribution is $15, so break-even is 3,334 units, or about $133,333 of revenue. Sales beyond that point are profit.
What is a good contribution margin?
It varies by industry: software and services often exceed 70%, restaurants and retail commonly run 25–40%, and distribution can be under 15%. What matters is whether the margin, times realistic volume, comfortably covers your fixed costs with room to spare.
Is my business data uploaded anywhere?
No — this calculator runs entirely in your browser. Your costs and prices never leave your device, and the tool works offline once the page has loaded.
Is this break-even calculator free?
Yes, completely free with no sign-up and no limits. Test as many price and cost scenarios as you like.
People also ask
What is the break-even formula in units and in dollars?
Break-even units = fixed costs ÷ (price − variable cost per unit). Break-even dollars = break-even units × price, or equivalently fixed costs ÷ contribution margin ratio. Both describe the same point where total revenue equals total costs.
How does raising my price change the break-even point?
Sharply. Every dollar of price increase goes straight into the contribution per unit, so a 10% price rise can cut break-even volume by 20% or more when margins are thin. The trade-off is whether demand at the higher price stays above the new, lower break-even.
What are the limitations of break-even analysis?
It assumes fixed costs never step up with capacity, variable cost per unit is constant, and you sell one product at one price. Real businesses face step costs, volume discounts and shifting product mixes, so recompute the break-even whenever those change.
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Sources & references
These tools follow our methodology and provide educational estimates only — verify important figures with a qualified professional.