How do you calculate the break-even point?

Break-Even Point (in units) = Fixed Costs ÷ (Price per Unit − Variable Cost per Unit). If fixed costs are $5,000/month, price is $25/unit, and variable cost is $10/unit, the contribution margin is $15, so break-even is $5,000 ÷ $15 = 334 units (rounded up). Break-even revenue is simply that unit count multiplied by price.

What is contribution margin and why does it matter?

Contribution margin is the profit left from each unit sold after covering only the variable cost of that unit — Price minus Variable Cost. It's the amount each sale 'contributes' toward paying off fixed costs. A higher contribution margin means fewer units are needed to break even.

What counts as a fixed cost versus a variable cost?

Fixed costs stay the same regardless of how many units you sell in a period — rent, salaried staff, insurance, loan payments. Variable costs scale directly with each unit sold — raw materials, packaging, sales commission, payment processing fees per transaction.

Can a business have a break-even point in revenue but never in units?

For a single product, units and revenue always break even at the same point (one is just the other multiplied by price). Break-even revenue on its own becomes more useful for businesses selling multiple products at different prices, where a single 'units' figure doesn't mean much across the whole catalog.

Break-Even Point Calculator

(Units, Revenue & Contribution Margin Tool)

Calculate exactly how many units you need to sell — and how much revenue that represents — before your business starts turning a profit, plus what it takes to hit a specific profit target.

Step 1 — Fixed & Variable Costs

Total Fixed Costs ($/month)

Rent, salaries, insurance — costs that don't change with sales volume

Selling Price per Unit ($)

What you charge the customer per unit

Variable Cost per Unit ($)

Materials, packaging, commission — cost that scales with each sale

Calculated Results

Enter fixed costs, price, and variable cost to calculate your break-even point.

Related Calculators

💰

Ad Spend Budget Calculator

Plan daily and monthly ad spend budgets, pacing, and profit yields

📊

Facebook Ads ROI Calculator

Calculate net profit, ROI %, ROAS, and break-even targets for Meta ads

📈

ROAS Calculator

Calculate return on ad spend, ROI, and profit or loss from campaigns

⚖️

Break-Even ROAS Calculator

Find your minimum ad profitability threshold

🖱️

CPC Calculator

Calculate cost per click, spend requirements, or click volume

🎯

CPA Calculator

Calculate cost per acquisition, budget requirements, or conversion yields

What the Break-Even Point Actually Measures

The break-even point is the sales volume at which total revenue exactly equals total costs — the line between losing money and making it. Below that number of units, fixed costs like rent and salaries haven't been fully covered yet; above it, every additional unit sold drops straight to profit at your contribution margin rate.

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

The denominator here — price minus variable cost — is called the contribution margin. It's the leftover per unit after direct costs, and it's the number that pays down your fixed costs one sale at a time.

Worked Example

A small workshop has $5,000/month in fixed costs (rent + one salaried employee). Each product sells for $25 and costs $10 in materials and packaging to make.

Contribution margin: $25 − $10 = $15 per unit
Break-even units: $5,000 ÷ $15 = 334 units/month
Break-even revenue: 334 × $25 = $8,350/month

Selling unit #335 and beyond in that month is where actual profit begins — each one adds $15 straight to the bottom line, since fixed costs are already fully covered.

Frequently Asked Questions (FAQ)

Yes, on paper — a lower price shrinks your contribution margin, so you need more units to cover the same fixed costs. Whether it's still a good move depends on whether the lower price sells enough additional volume to more than make up the difference, which this calculator won't tell you on its own.

Then your contribution margin is negative, and there is no break-even point — every unit sold loses more money, and selling more only makes the loss bigger. The price needs to increase or the variable cost needs to come down before break-even math applies at all.