Break-Even Calculator

Find the sales volume at which total revenue exactly covers total costs — your break-even point.

How the Math Works

The Break-Even Calculator uses the formula units = fixed costs ÷ (price − variable cost) to determine when revenue equals expenses. Fixed costs are investments like rent or equipment that don't change with production volume. Variable cost per unit is what you spend to make each item, and price is what you sell it for. The difference between price and variable cost is your contribution margin - the amount each sold unit contributes toward covering fixed costs. Dividing fixed costs by this margin tells you exactly how many units must sell to break even.

Practical Applications

To use this calculator, gather your total fixed costs for the period, determine your selling price per unit, and identify your variable cost per unit. For example, if your fixed costs total $5,000, you sell widgets for $25 each, and your variable cost is $15 per widget, you'd need to sell 500 units (5000 ÷ (25-15)) to cover all expenses. This calculation helps you set realistic sales targets and pricing strategies before launching products or services.

Day-to-Day Use

Knowing your break-even point helps you make informed business decisions daily. You can quickly assess whether a promotion will be profitable, if a new product line is worth pursuing, or when you'll achieve profitability. For instance, if you're running a clearance sale, you can calculate how many discounted items you need to sell to still cover your costs. This prevents costly mistakes and ensures you never operate at a loss longer than necessary.

Worked example

$10,000 fixed, $25 price, $15 variable → $10 contribution → 1,000 units ($25,000 revenue).

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