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Break-Even Point Calculator
Break-even point calculator. Enter fixed costs, price per unit, and variable cost per unit to calculate the break-even point in units and revenue. Includes the formula and a worked example.
Break-even results
Contribution margin
Price − variable cost
Break-even units
Break-even revenue
Units × price
How to Calculate Break-Even Point
If you’re searching for “how to calculate break even point”, the key idea is contribution margin: how much profit each unit contributes toward covering your fixed costs.
Break-Even Point Formula (Units)
Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit)
The term (Price − Variable cost) is your contribution margin.
Break-Even Point Formula (Revenue)
Break-even revenue = Break-even units × Price per unit
Worked Example
- Fixed costs: $1,000
- Price per unit: $25
- Variable cost per unit: $10
Contribution margin = $25 − $10 = $15
Break-even units = $1,000 ÷ $15 = 66.67 → 67 units (rounded up)
Break-even revenue = 66.67 × $25 = $1,666.67
Notes
- If your price is less than or equal to your variable cost, you have no break-even point (each sale loses money before fixed costs).
- If you can only sell whole units, round break-even units up to the next whole number.
Frequently Asked Questions
What is the break-even point?
The break-even point is the sales volume at which total revenue equals total costs — meaning neither a profit nor a loss is made. Every unit sold beyond the break-even point generates profit.
What is the break-even formula?
Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit). The denominator is called the contribution margin per unit. For example, with $10,000 fixed costs, a $50 price, and $30 variable cost, break-even = 10,000 ÷ 20 = 500 units.
What are fixed costs vs variable costs?
Fixed costs remain constant regardless of how many units are produced — rent, salaries, insurance, and equipment. Variable costs change with each unit produced — raw materials, packaging, and direct labour. Understanding this distinction is essential for break-even analysis.
What is contribution margin?
Contribution margin is the revenue remaining from each sale after deducting variable costs. It is the amount each unit "contributes" toward covering fixed costs and generating profit. Contribution margin = Price per unit − Variable cost per unit.
How can I lower my break-even point?
You can lower break-even by reducing fixed costs (e.g., cheaper premises, fewer overheads), reducing variable costs (e.g., better supplier terms), or increasing the selling price. Increasing volume does not lower the break-even point — it just means you reach it faster.
What is break-even revenue?
Break-even revenue is the total sales amount needed to cover all costs. It equals break-even units × price per unit. This is useful when you think in dollar terms rather than unit counts, particularly for service businesses.