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Break-even Calculator

Find the number of units you need to sell to cover your costs - and the revenue that generates. Enter your fixed costs, selling price, and variable cost per unit to see the break-even point instantly. Free, no signup.

Rent, salaries, overheads

Materials, packaging, labour

Enter fixed costs, price per unit, and variable cost per unit to find the break-even point.
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This tool provides estimates for general information only. It is not financial, tax, legal, or professional advice. Check important figures with a qualified professional before making decisions.

How to use this tool

  1. 1Enter your fixed costs - the total monthly or annual costs that stay the same regardless of sales volume (rent, salaries, software subscriptions).
  2. 2Enter your price per unit - the amount you charge for each product or service.
  3. 3Enter your variable cost per unit - the costs that increase with each unit sold (materials, packaging, delivery, payment fees).
  4. 4Read the break-even units and revenue. This is the minimum you must sell to cover all costs with zero profit or loss.
  5. 5Adjust price or variable cost to see how a pricing change or cost reduction improves your break-even point.

Formula used

Contribution margin = price per unit - variable cost per unit. Break-even units = fixed costs / contribution margin. Break-even revenue = break-even units x price per unit.

Example

Fixed costs 6,000, price 80, variable cost 32

Contribution margin is 48. Break-even is 6,000 / 48 = 125 units, or 10,000 in revenue. Sell more than 125 units and the business is profitable; sell fewer and it makes a loss.

Same setup, price raised to 100

Contribution margin rises to 68. Break-even drops to 89 units (6,000 / 68), or 8,900 in revenue. A 25% price increase cuts the break-even unit count by 29% - pricing has a powerful effect on break-even.

Common use cases

  • Deciding whether to launch a new product by checking if realistic sales volume exceeds break-even
  • Setting a monthly sales target for a team based on covering overheads
  • Evaluating whether a price increase reduces break-even enough to justify the risk
  • Checking how many clients a freelancer needs to cover their costs each month
  • Comparing two business models with different cost structures to see which breaks even sooner

Common mistakes

  • Including the owner's drawings or salary in variable costs - owner salary is a fixed cost (it doesn't change with each unit sold) and should go in fixed costs.
  • Forgetting payment processing fees as a variable cost - a 2.9% + 0.30 Stripe fee adds up and reduces contribution margin on every sale.
  • Not updating the calculation when costs or prices change - break-even is not a one-time number. Recalculate when you hire, raise prices, or renegotiate with suppliers.
  • Treating break-even as the sales target - break-even is the floor, not the goal. Profit requires selling above break-even by a meaningful margin.

Frequently asked questions

What is a break-even point?

The break-even point is the sales volume at which total revenue exactly equals total costs - there is no profit and no loss. Above break-even, every additional unit generates profit equal to the contribution margin.

What counts as a fixed cost?

Fixed costs stay the same regardless of how many units you sell. Examples include rent, salaries, insurance, loan repayments, software subscriptions, and equipment leases. They continue whether you sell 1 unit or 1,000.

What counts as a variable cost?

Variable costs increase with every unit sold. Examples include raw materials, packaging, shipping, payment processing fees, and sales commissions. If a cost only occurs when you make a sale, it is variable.

What is contribution margin?

Contribution margin is the selling price minus the variable cost per unit. It is the amount each unit 'contributes' toward covering fixed costs. Once fixed costs are fully covered, contribution margin becomes profit.

How do I lower my break-even point?

Three ways: raise your selling price (increases contribution margin), reduce variable costs per unit (increases contribution margin), or reduce fixed costs (lowers the target to reach). Raising the price has the biggest lever effect in most businesses.

Does this work for service businesses?

Yes. For services, 'units' can be hours, clients, projects, or any repeatable service. Price per unit is your hourly or project rate, and variable cost is any cost directly tied to delivering that service (subcontractors, materials, software per client).

What if my price is lower than my variable cost?

If the price is lower than the variable cost, every unit sold makes the loss worse. There is no break-even point - the business cannot cover fixed costs no matter how much it sells. The calculator shows an error in this case. You must raise the price or cut variable costs.

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