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Simple Calculators

Break-Even Calculator

Calculate how many units you need to sell to cover costs and start making a profit

Break-Even Calculator
$

Rent, salaries, insurance, equipment — costs that don't change with output

$

Materials, direct labor, packaging — costs per unit sold

$

Used to calculate margin of safety and projected profit

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Quick summary

The break-even point is the sales volume at which total revenue equals total costs — the point of zero profit or loss. Below break-even you're losing money; above it you're profitable. The contribution margin (price minus variable cost) is the engine: each unit sold contributes that amount toward covering fixed costs.

Reviewed by Simple Calculators TeamLast reviewed

How to use this calculator

  1. Enter the inputs requested by the calculator.
  2. Choose the units or options that match your situation and review the assumptions.
  3. Run or update the calculation to see the result.
  4. Review the result, breakdown, and formulas shown on the page.
  5. Check the inputs, units, dates, and limitations before saving or sharing the result.

Break-Even Formulas

Break-Even Point (Units)

BEP=Fixed CostsPrice−Variable Cost per Unit\text{BEP} = \frac{\text{Fixed Costs}}{\text{Price} - \text{Variable Cost per Unit}}
Fixed Costs
Total costs that do not change with output (rent, salaries, insurance)
Price
Selling price per unit
Variable Cost
Cost per unit that varies with production (materials, direct labor)

Worked example

$10,000 fixed costs, $25 price, $15 variable cost

Given
Fixed Costs = $10,000
Price = $25
Variable Cost = $15
Calculation
BEP=10,00025−15=10,00010\text{BEP} = \frac{10{,}000}{25 - 15} = \frac{10{,}000}{10}
Result
Break-even = 1,000 units

Contribution Margin Ratio

CM Ratio=Price−Variable CostPrice×100\text{CM Ratio} = \frac{\text{Price} - \text{Variable Cost}}{\text{Price}} \times 100
Price
Selling price per unit
Variable Cost
Variable cost per unit

Worked example

$25 price, $15 variable cost

Given
Price = $25
Variable Cost = $15
Calculation
CM Ratio=25−1525×100\text{CM Ratio} = \frac{25 - 15}{25} \times 100
Result
Contribution Margin = 40%

Frequently asked questions

What is the contribution margin?

The contribution margin is the selling price minus the variable cost per unit. It represents how much each unit sold contributes toward covering fixed costs. Once fixed costs are fully covered, every additional unit sold generates profit equal to the contribution margin.

What is the difference between fixed and variable costs?

Fixed costs remain constant regardless of production volume: rent, salaried employees, insurance, equipment depreciation. Variable costs change proportionally with output: raw materials, hourly labor, packaging, sales commissions. Some costs are "mixed" (e.g., utilities have a fixed base plus a variable component).

What is margin of safety?

The margin of safety is the gap between actual (or expected) sales and break-even sales: Margin of Safety = (Actual Sales − Break-Even Sales) / Actual Sales × 100. A 30% margin of safety means sales can drop 30% before you start losing money.

How does pricing affect the break-even point?

A higher price increases the contribution margin, reducing the number of units needed to break even. But price increases can also reduce sales volume. Break-even analysis should be combined with demand elasticity and market research. Use the profit/loss scenario table to model different price-volume combinations.

Key terms

Break-Even Point (BEP)
The sales volume at which total revenue equals total costs — neither profit nor loss.
Contribution Margin
Selling price minus variable cost per unit. The amount each unit contributes toward fixed costs and profit.
Fixed Costs
Costs that remain constant regardless of production or sales volume (rent, insurance, salaries).
Variable Costs
Costs that change proportionally with production volume (materials, direct labor, packaging).
Margin of Safety
The percentage by which sales can decline before the business reaches break-even.

Methodology, sources & limitations

This page shows the formula, assumptions, and limitations used for this estimate. Rates, thresholds, and other time-sensitive inputs can change, so verify them against the relevant official source before relying on a result.

For our review approach and the primary sources we consult, see the methodology and source policy. If you spot an outdated figure or formula, please contact us with a correction.