Break-Even Point Calculator
Calculate the break-even quantity and break-even revenue from fixed costs, price per unit, and variable cost per unit.
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Break-Even Units
1,000
Break-Even Revenue
$50,000
Contribution Margin per Unit
$20
How Break-Even Point Is Calculated
The break-even point is the number of units you need to sell for total revenue to exactly cover total costs — the point where profit is zero. It depends on your fixed costs (rent, salaries, and other costs that don't change with volume), the price per unit, and the variable cost per unit (materials, direct labor).
Break-Even Units = Fixed Costs ÷ Contribution Margin
Break-Even Revenue = Break-Even Units × Price per Unit
Example
With $20,000 in fixed costs, a $50 price per unit, and a $30 variable cost per unit, the contribution margin is $20. Break-even units = 20,000 ÷ 20 = 1,000 units, generating break-even revenue of 1,000 × $50 = $50,000. Selling beyond 1,000 units starts generating profit.
Common Use Cases
- Setting a minimum sales target before launching a new product.
- Deciding whether a proposed price covers costs at a realistic sales volume.
- Evaluating how a change in fixed or variable costs shifts the break-even point.
- Comparing pricing strategies for their impact on required sales volume.
FAQs
What happens if variable cost is higher than the price?
If the variable cost per unit equals or exceeds the price, the contribution margin is zero or negative, meaning every unit sold loses money and break-even is mathematically impossible — the price needs to be raised or costs cut.
What counts as a fixed cost versus a variable cost?
Fixed costs stay the same regardless of sales volume, like rent, salaried staff, and insurance. Variable costs scale directly with units sold, like raw materials, packaging, and sales commissions.
Does break-even analysis guarantee profitability?
No — it only tells you the point where profit is zero. Actual profitability depends on hitting or exceeding that sales volume consistently, along with managing costs and demand over time.