Break-Even Calculator
Work out how many units and how much revenue you need to break even, with contribution margin, profit targets and margin of safety.
Rent, salaries, software — does not change with volume
Materials, shipping, fees — one unit's worth
Sell 1,000 units per month — $25,000.00 in sales — to cover $10,000.00 of fixed costs.
Change the three figures above to match your business — the break-even point is worked out as you type. Open “Add a profit target or expected sales” for your margin of safety.
- Break-even point (units)
- 1,000
- Break-even point (sales)
- $25,000.00
- Contribution margin per unit
- $10.00
- Contribution margin ratio
- 40.00%
Add a profit target or expected sales
- Units for target profit
- —
- Sales for target profit
- —
- Profit at expected sales
- —
- Margin of safety
- —
Units can only be sold whole, so treat the unit figures as a floor.
How it works
This is the standard contribution-margin break-even model used in management accounting.
First it works out the contribution margin per unit — the selling price
minus the variable cost of making or delivering one unit
(CM = price − variable cost). Every unit you sell contributes that amount
towards your fixed costs. The break-even point in units is therefore
fixed costs ÷ contribution margin per unit, and the break-even point in sales
revenue is fixed costs ÷ contribution margin ratio, where the ratio is
CM ÷ price. With fixed costs of 10,000, a price of 25 and a variable cost of 15,
the margin is 10 per unit, so you break even at 1,000 units or 25,000 in sales.
Add a profit target and it solves (fixed costs + target profit) ÷ CM per unit —
1,500 units in that example for a 5,000 profit. Enter the sales you actually expect and it
shows the profit you would make (units × CM − fixed costs) plus your
margin of safety, the percentage by which sales can fall before you start
losing money: (expected − break-even) ÷ expected × 100. Fixed costs are the ones
that do not change with volume (rent, salaries, software, insurance); variable costs are the
ones that do (materials, packaging, shipping, payment fees, commission). Units can only be
sold whole, so round the break-even figure up.
Everything is calculated in your browser with plain JavaScript. Your cost and price figures never leave your device — there is no sign-up, no ads and no data collection.
Frequently asked questions
How do you calculate the break-even point?
Use the contribution-margin method. First find the contribution margin per unit: selling price minus the variable cost of one unit. Then divide your fixed costs for the period by that margin. With 10,000 of fixed costs, a price of 25 and a variable cost of 15, the margin is 10 per unit, so you break even at 10,000 ÷ 10 = 1,000 units. In sales terms, divide fixed costs by the contribution margin ratio (10 ÷ 25 = 40%), which gives 10,000 ÷ 0.40 = 25,000 in revenue.
What counts as a fixed cost and what counts as a variable cost?
Fixed costs stay the same however much you sell: rent, salaries, insurance, software subscriptions, accounting fees, loan interest. Variable costs change with each unit sold: raw materials, manufacturing labour paid per item, packaging, shipping, payment-processing fees and sales commission. Put a cost in the variable box only if selling one more unit makes it go up. Semi-variable costs such as a phone plan with overage are usually split, with the standing charge treated as fixed.
What is the margin of safety and how much do I need?
The margin of safety is how far sales can fall before you start making a loss: (expected sales − break-even sales) ÷ expected sales × 100. If you break even at 1,000 units and expect to sell 1,500, your margin of safety is 33.33%, or 500 units. There is no universal target, but a thin margin under about 10% means small dips in demand push you into loss, so many small businesses aim for 20% or more, or work to lower fixed costs and raise the contribution margin.