Finance

Break-Even Calculator

Find how many units must be sold to cover fixed and variable costs.

The result gives the break-even point in units and the matching break-even revenue in dollars, so selling fewer units than the break-even figure leaves fixed costs uncovered, while sales beyond that point start to produce profit.

Formula

Break-even units equal fixed costs divided by price minus variable cost per unit.

How it works

The contribution margin — price minus variable cost — is what each sale contributes toward fixed costs. Once break-even units are sold, further sales start producing profit.

Worked example

For example, with fixed costs of $5000, a price of $25 per unit and a variable cost of $15 per unit, each sale contributes $25 − $15 = $10 toward fixed costs, so $5000 ÷ $10 = 500 units must be sold to break even, giving break-even revenue of 500 × $25 = $12500.00.

FAQs

What are fixed costs?
Costs that do not change with output, like rent and salaries.

What if price equals variable cost?
Then no sale contributes to fixed costs, so break-even is impossible at that price.

Does it include tax?
No, this is a pre-tax operating break-even.

Are these figures financial advice?
No — they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.

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