Break-Even Calculator

What is break-even analysis?

Break-even analysis tells you the minimum sales volume where your total revenue equals your total costs — the point where you stop losing money and start making a profit. Every unit sold beyond break-even is pure contribution to profit.

The formula is straightforward:

Break-Even Units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit)

The denominator — selling price minus variable cost — is your contribution margin per unit. It represents how much each sale contributes toward covering your fixed costs. Once enough units have covered those fixed costs, every additional sale generates profit equal to the contribution margin.

Fixed costs vs variable costs

Fixed costs stay the same regardless of how many units you sell: rent, salaries, insurance, software subscriptions, loan payments. Variable costs change with each unit produced or sold: materials, shipping, transaction fees, sales commissions, packaging.

Some costs are semi-variable — they're fixed up to a point but increase in steps (like hiring another employee when volume exceeds capacity). For break-even analysis, estimate the average variable cost per unit across your expected range.

Using break-even for pricing decisions

If your break-even point seems unrealistically high, you have three levers: raise your price (increases contribution margin), lower variable costs (same effect), or reduce fixed costs. The calculator lets you experiment with all three in real time to find a viable combination.

Break-even for service businesses

Service businesses can use break-even analysis too. Your "unit" is a billable hour, project, or client. Fixed costs are overhead (office, tools, non-billable salaries). Variable cost per unit might be subcontractor fees or materials per project. The same formula applies — you're finding how many billable units cover your overhead.