Break-even calculator
Find the number of units you need to sell to cover your fixed and variable costs — and the volume needed to hit a target profit.
Calculator businessLogic updated April 2026
This calculator finds the break-even point of a business or product line — the unit volume and revenue at which fixed costs are exactly covered by contribution margin, leaving zero profit and zero loss. Below break-even, you're losing money on every unit sold; above, every additional unit contributes purely to profit. It's the single most useful number for pricing, capacity, and viability decisions.
How this is calculated
Formula
contributionMargin = pricePerUnit − variableCostPerUnit ; breakEvenUnits = fixedCosts / contributionMargin ; unitsForTargetProfit = (fixedCosts + targetProfit) / contributionMarginStep-by-step
- Calculate the contribution margin per unit by subtracting variable cost from selling price
- If contribution margin is zero or negative, break-even is mathematically impossible — the engine flags this and recommends a price increase or variable cost reduction
- Divide fixed costs by contribution margin to get the break-even unit volume
- Multiply break-even units by the price per unit to express break-even as a revenue figure
- To find units needed for a target profit, add the target profit to fixed costs and divide by contribution margin
- Express contribution margin as a percentage of price (margin ÷ price × 100) to compare profitability across products
- Rounding mode
- ROUND_HALF_UP
- Precision
- 20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
- Logic last reviewed
Assumptions & limitations
What this calculator assumes
- Fixed costs are constant over the planning horizon
- Selling price and variable cost per unit are held constant
- All units produced are sold (no inventory build-up)
- Linear cost and revenue behaviour — no volume discounts or step changes
What this calculator doesn’t account for
- Does not model price elasticity (selling more units may require lower prices)
- Does not include step changes in fixed costs (capacity expansions, additional shift hires)
- Does not factor in seasonal demand variability
- Does not include taxes or interest on debt finance
- Treats all output as one product line — multi-product break-even requires weighting by sales mix
Worked example
A business has $50,000 of monthly fixed costs and sells a product for $100 per unit with $40 of variable cost per unit. They want to know the break-even volume and the volume needed for a $20,000 monthly profit.
| Input | Value |
|---|---|
| Fixed costs (monthly) | $50,000 |
| Price per unit | $100 |
| Variable cost per unit | $40 |
| Target profit (monthly) | $20,000 |
Contribution margin: $60/unit (60%) — Break-even: 834 units / $83,400 — Target profit: 1,167 units / $116,700
Each unit sold contributes $60 toward fixed costs and profit. To cover $50,000 of fixed costs, you need $50,000 ÷ $60 = 834 units (rounded up — at exactly 833.33 units you'd still be losing 20 cents). Beyond 834 units, every additional unit adds $60 of pure profit. To make $20,000 profit, you need ($50,000 + $20,000) ÷ $60 = 1,167 units.
Frequently asked questions
What is a break-even point?
The volume of sales — measured in units or revenue — at which total revenue exactly covers total costs. Below this point, the business loses money on the period; above it, every additional unit produces profit because fixed costs are already covered. It's a critical baseline for setting prices, evaluating new product lines, and stress-testing assumptions.
How is contribution margin calculated?
Contribution margin per unit is the selling price minus the variable cost of producing that unit. For a $100 product with $40 of materials and labour, the contribution margin is $60. Each unit sold contributes that $60 to covering fixed costs (and once fixed costs are covered, to profit). Higher contribution margins mean fewer units are needed to break even — that's why software businesses with near-zero variable cost have such low break-even points.
What if my price is below variable cost?
You're losing money on every unit, and break-even is mathematically impossible — selling more units only deepens losses. The calculator flags this case explicitly. The fix is either raising the price (so it exceeds variable cost) or reducing variable cost (cheaper materials, more efficient production). Any business in this situation cannot scale its way to profitability without changing the unit economics.
How do fixed costs affect break-even?
Fixed costs determine how much contribution margin you need to generate before profits begin. Halving fixed costs halves the break-even point at the same contribution margin. Doubling fixed costs (e.g. signing a new lease, hiring a permanent team) doubles it. Be especially careful before adding fixed costs — they raise the volume floor regardless of how good the unit economics are.
Can I use this for service businesses?
Yes — treat each service delivery as a 'unit'. For a consulting practice charging $200/hour with $50/hour of variable costs (subcontractor fees, expenses), contribution margin is $150/hour. If fixed costs (rent, salaries, software) are $30,000 a month, break-even is 200 billable hours per month. The same calculator works for software with per-seat pricing, professional services, or any model where you can identify a price and a variable cost per unit of work.
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