Break-Even Calculator
Starting a business or launching a product? The break-even point tells you exactly how many units you need to sell before you stop losing money and start making it. Enter your fixed costs, variable cost per unit, and selling price.
Rent, salaries, etc.
Material, packaging
How to use
- Enter your total fixed costs - things like rent, salaries, and equipment that you pay regardless of how much you sell.
- Enter the variable cost per unit - materials, packaging, shipping, anything that goes up when you sell more.
- Enter what you're charging per unit.
- Hit Calculate to see how many units you need to sell to break even, and what revenue that equals.
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The break-even point is where your total revenue exactly covers your total costs - no profit, no loss. It's calculated by dividing total fixed costs by the difference between selling price and variable cost per unit (that difference is called the contribution margin). For example, if your fixed costs are $10,000, you sell each unit for $50, and it costs you $30 to make each one, you need to sell 500 units just to break even.
This number matters before you've even launched. If the break-even quantity looks unrealistically high given your market, you might need to raise prices, cut variable costs, or rethink fixed overhead. For existing businesses, it's useful for evaluating new product lines, pricing changes, or whether a specific sales campaign actually moved the needle.
Frequently Asked Questions
What counts as a fixed cost vs a variable cost?
Fixed costs stay the same regardless of output - rent, salaries, insurance, loan repayments. Variable costs rise with each unit you produce or sell - raw materials, packaging, shipping, sales commissions. Some costs are semi-variable (like a tiered phone plan), so use your best estimate when those come up.
What if I sell multiple products?
The calculator assumes a single product. For multiple products, use a weighted average contribution margin based on your expected sales mix, or run a separate break-even analysis for each product line.
Can I use this for a service business?
Yes. Fixed costs would be things like office rent, software subscriptions, or a salaried team. Variable costs might be contractor fees or transaction costs per client. Selling price is your service rate per client or project.
What's a contribution margin ratio?
It's the contribution margin expressed as a percentage of price: (price - variable cost) / price. A 40% contribution margin ratio means 40 cents of every rupee/dollar of revenue goes toward covering fixed costs and eventual profit.