Break-even Calculator
Enter your fixed costs, price per unit and variable cost per unit to find your break-even point in units and revenue.
Reviewed by the ToolNestr Editorial Team — July 2026
How break-even is calculated
The break-even point is calculated by dividing total fixed costs by the contribution margin per unit. The formula is Break-even units = Fixed costs / (Price per unit - Variable cost per unit). The denominator is the contribution margin — the amount each sale contributes toward covering fixed costs and eventually generating profit. Break-even revenue is then Break-even revenue = Break-even units × Price per unit.
The calculation assumes every unit is sold at the same price with the same variable costs. Once you sell beyond the break-even point, every additional unit sold generates pure profit (after variable costs), since all fixed costs have been covered. This is why understanding your break-even point is fundamental to setting sales targets and pricing strategy.
Worked example
A small business has $25,000 in monthly fixed costs, sells each unit for $75, and has variable costs of $35 per unit.
About break-even analysis
Every business needs to know its break-even point — the moment sales start turning into profit. This calculator tells you exactly how many units you must sell and how much revenue that represents, helping you set targets, price products and judge whether an idea is viable. Once you know your break-even point, use the Profit Margin Calculator to see how much profit you'll make on each sale beyond break-even.
How to use it
- Enter your total fixed costs (rent, salaries, insurance, etc.) for the period.
- Enter the price you charge per unit of your product or service.
- Enter the variable cost per unit (materials, shipping, commissions).
- See how many units you need to sell to break even and the revenue that represents.
When to use this tool
This tool is a must when you're launching a new business or product line and need to know whether the numbers work before investing time and money. It is equally useful for established businesses setting monthly sales targets, evaluating a price increase's impact on required volume, or deciding whether a new piece of equipment (which raises fixed costs) is worth the investment.
Tips for best results
- Be thorough with your fixed costs — include everything from rent and salaries to software subscriptions and utilities. Missing costs leads to an artificially low break-even point.
- Recalculate whenever your costs or prices change; even small shifts can move your break-even point significantly.
- Run scenarios at different price points to see how a small price increase could dramatically reduce the number of units you need to sell.
What different contribution margins mean
Your contribution margin per unit determines how quickly you reach break-even. Higher margins mean fewer sales needed to cover fixed costs.
Startup Founder
Validate your business idea by calculating how many units you need to sell before launch. Use the data to decide if your concept is financially viable.
Product Manager
Evaluate new product launches by forecasting the sales volume needed to recoup development and production costs within your target timeframe.
CFO / Financial Controller
Set departmental sales targets and evaluate the financial impact of cost changes, price adjustments, and capital investments on the company's break-even point.
Restaurant Owner
Calculate how many covers or meals you need to serve each month to cover rent, staff, food costs, and utilities — essential for menu pricing decisions.
| Fixed costs | Price per unit | Variable cost | Break-even units | Break-even revenue |
|---|---|---|---|---|
| $2,000 | $25 | $10 | 134 | $3,350 |
| $5,000 | $50 | $20 | 167 | $8,350 |
| $10,000 | $75 | $30 | 223 | $16,725 |
| $25,000 | $100 | $40 | 417 | $41,700 |
| $50,000 | $200 | $80 | 417 | $83,400 |
| $100,000 | $500 | $200 | 334 | $167,000 |
| $250,000 | $1,000 | $400 | 417 | $417,000 |
| $500,000 | $2,500 | $1,000 | 334 | $835,000 |
How to use the break-even calculator
Enter your fixed costs
Type all fixed costs for the period — rent, salaries, insurance, software, equipment leases — anything that stays constant regardless of sales volume.
Set price and variable cost
Enter your selling price per unit and the variable cost per unit (materials, shipping, commissions, payment fees). The difference is your contribution margin.
Find your break-even point
See the exact number of units you need to sell and the revenue required to cover all costs. Adjust any input to explore different scenarios.
Tips for effective break-even analysis
Don't underestimate fixed costs
Many businesses fail to account for all their fixed costs — software subscriptions, professional fees, insurance, utilities, and maintenance add up. Be exhaustive in your list for a realistic break-even target.
Revisit after every cost change
A rent increase, supplier price hike, or new hire can shift your break-even point significantly. Make break-even recalculations a standard part of your monthly financial review process.
Use scenario planning
Test best-case, worst-case, and most-likely scenarios by varying your price and costs. Understanding the range of possible break-even points prepares you for different market conditions.
Frequently asked questions
What is the break-even point?
It's the number of units you must sell so that total revenue exactly covers total costs — no profit, no loss. Beyond it, you start making a profit.
How is it calculated?
Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The bottom part is your contribution margin per unit.
Why must price be above variable cost?
If each sale doesn't cover its own variable cost, you lose money on every unit and can never break even.
How does lowering my price affect my break-even point?
A lower price reduces your contribution margin per unit (revenue minus variable cost), so you need to sell more units to break even. This calculator shows exactly how many additional units you would need to sell to make up for a price cut.
What if I sell multiple products?
For multiple products, calculate the break-even point using your average contribution margin across all products, or run the calculation separately for each product to understand which ones cover your fixed costs most efficiently.
How often should I recalculate my break-even point?
Revisit your break-even calculation whenever your costs change — a rent increase, new supplier pricing, or added staff all affect it. Many businesses review it quarterly to stay on top of changing economics.
What if my break-even point is too high?
If you need to sell more units than your market can support, you have three levers: reduce fixed costs (cheaper rent, leaner operations), increase your price, or lower your variable costs (better supplier, cheaper materials). The calculator helps you test each scenario.
How does seasonality affect break-even?
If your business is seasonal, calculate your break-even point over a full year rather than a single month. You may operate at a loss in slow months and make up for it during peak periods. Factor in the monthly cash flow gap to ensure you have enough working capital.
Can I calculate break-even for a service business?
Yes. Treat your time as the "unit" — set price per hour or per project as the price per unit, and your hourly cost (wages + overhead) as the variable cost. Fixed costs work the same as for a product business.
How do economies of scale affect break-even?
As you produce more units, fixed costs are spread over more sales and variable costs often decrease due to bulk discounts. This means your actual break-even point may decrease as you scale. Recalculate periodically as your cost structure changes.