Break Even Calculator: The Sales Volume That Covers Your Costs
The break-even point is the number of units you must sell for total revenue to equal total costs. It comes from dividing fixed costs by the contribution margin — the profit each unit adds after its own variable cost.
Fixed versus variable costs
Fixed costs stay the same whatever you sell: rent, salaries, insurance, software subscriptions. Variable costs move with volume: materials, packaging, shipping, payment processing, hourly labour. Misclassifying a cost distorts the break-even point badly, and semi-variable costs such as utilities usually need splitting between the two.
Contribution margin drives everything
Contribution margin is price minus variable cost per unit. With 50,000 of fixed costs, a 100 price and 60 of variable cost, each sale contributes 40 and break-even is 1,250 units. Raising the price by 10 lifts contribution to 50 and drops break-even to 1,000 units — a 20% reduction from a 10% price rise, which is why pricing usually beats cost-cutting.
Using it for decisions
- Test whether a new product's realistic volume clears its break-even.
- Check how much fixed cost a new hire or lease adds and how many extra sales that requires.
- Calculate margin of safety: how far sales can fall before you make a loss.
- Model a target-profit volume by adding the profit goal to fixed costs.
Key takeaways — Break Even Calculator
- Break-even units = fixed costs ÷ (price − variable cost per unit).
- Small price increases move the break-even point more than small cost cuts.
- Recalculate whenever fixed costs, pricing or supplier costs change.