Break-Even Calculator
Find how many units you must sell to break even, from your fixed costs, price, and variable cost per unit.
How it's calculated
The break-even point is the sales volume where your business stops losing money and starts making it. Every unit you sell brings in its price but also costs something to make or deliver, the variable cost. What is left over, the price minus the variable cost, is the contribution margin, and it is the money each sale contributes toward your fixed costs. Once enough units have sold to cover all the fixed costs, you break even, and every unit after that is profit.
Work the default. Your fixed costs are $50,000 a year, you sell each unit for $40, and each one costs $15 to produce. The contribution margin is $40 minus $15, which is $25 per unit, or 62.5 percent of the price. Divide the $50,000 of fixed costs by the $25 margin and you need to sell 2,000 units to break even. At $40 each, that is $80,000 in revenue. Sell fewer and you lose money, sell more and you profit $25 for each extra unit.
The contribution margin is the lever that matters most. Raising the price or cutting the variable cost widens the margin, so you break even on fewer sales. Lowering fixed costs drops the bar directly. This is why a business with high fixed costs and thin margins needs high volume to survive, while one with fat margins can break even quickly. Change the price and costs here to see how far the break-even point moves.
Assumptions
- Each unit contributes its price minus its variable cost toward fixed costs. Break-even is where those contributions exactly cover the fixed costs.
- Price and variable cost are assumed constant per unit. Volume discounts, price changes, and step-ups in fixed costs are not modeled.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
How do I calculate the break-even point?
Divide your fixed costs by the contribution margin per unit, which is the price minus the variable cost per unit. The result is the number of units you must sell to cover all your costs. Multiply by the price to get the break-even revenue.
What is contribution margin?
It is the money each sale contributes toward fixed costs and profit, equal to the price minus the variable cost of that unit. A $40 product that costs $15 to make has a $25 contribution margin. The higher it is, the fewer units you need to break even.
What counts as a fixed versus a variable cost?
Fixed costs stay the same no matter how much you sell, like rent, salaries, insurance, and software subscriptions. Variable costs rise with each unit, like materials, packaging, shipping, and payment processing. Sorting your costs into these two buckets is the key step.
How can I lower my break-even point?
Three levers move it. Raise your price, cut the variable cost per unit, or reduce fixed costs. Any of these lets you break even on fewer sales. Widening the contribution margin through price or variable cost usually has the biggest effect, since it improves every future sale too.