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Bethemesh
Finance & business

Break-even Calculator and Break-even Point

Calculate your break-even point from fixed costs, unit selling price excluding tax and unit variable cost. Get contribution margin, units to sell and required revenue.

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Break-even calculation

Enter your fixed costs, unit selling price excluding tax and unit variable cost.

Unit contribution margin-
Units to sell-
Break-even revenue-

Your break-even point

Contribution margin ratio-
Advanced options
Average target-
Average revenue target-

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How does this tool work?

This break-even calculator works out the sales volume and the revenue before tax you need to cover your fixed costs. It is based on the contribution margin each unit sold brings in, once its own variable cost is paid.

Unit contribution margin is the selling price before tax minus the unit variable cost: the amount each sale leaves to pay for fixed costs.

Break-even units are fixed costs divided by that unit margin. Since you usually cannot sell a fraction of a unit, the operational target is rounded up to the next whole unit.

Break-even revenue relies on the contribution margin ratio, the share of each dollar or euro of sales left after variable costs. The advanced options then turn the target into a monthly average.

How to use this tool

  1. Enter your fixed costs

    Enter the expenses that do not change directly with the number of units sold, such as rent, salaries or subscriptions.

  2. Enter your selling price

    Use the unit price before VAT or sales tax.

  3. Add the unit variable cost

    Enter the cost directly tied to one unit sold, such as materials, packaging or a sales commission.

  4. Review your break-even point

    Check the units to sell, the break-even revenue and the unit contribution margin.

Break-even formulas

The calculation is based on the margin each unit generates before fixed costs are absorbed.

Unit contribution margin

Unit margin = Selling price − Unit variable cost

This margin first contributes to covering fixed costs.

Units to sell

Break-even units = Fixed costs / Unit margin

For indivisible products, round up to the next whole unit.

Break-even revenue

Break-even revenue = Fixed costs / Contribution margin ratio

This gives the revenue required to reach equilibrium.

This model assumes selling price and unit variable cost remain constant over the period.

See the detailed explanation

Contribution margin

Each sale absorbs fixed costs through its unit contribution margin.

  • Selling price − variable cost
  • A higher unit margin lowers break-even
Learn more

Break-even point or time to break even?

The break-even point is an amount of revenue or a sales volume; the time to break even says when that level is reached.

  • Break-even point: amount or volume
  • Time to break even: a date or a duration
Compare

Use cases

Product launch

Estimate how many units you need to sell before your fixed costs are covered.

Sales forecasting

Turn your cost structure into a clear revenue and volume target for the period.

Price change analysis

Measure how raising or lowering the selling price moves your break-even point.

Cost analysis

See how a higher variable cost increases the quantity you have to sell.

Examples

Product sold for €50 before tax

Unit margin: €20; break-even point: 500 units; break-even revenue: €25,000 before tax.

Input

€10,000 fixed costs · €50 selling price before tax · €30 variable cost

Tips and best practices

  • Work with amounts before tax, so that VAT or sales tax is not mistaken for business performance.
  • Include every fixed cost of the reference period, including the ones paid once a year.
  • If several products have very different margins, an overall calculation needs assumptions about the sales mix.
  • Break-even pairs well with ROI: the first tells you when you stop losing money, the second measures the return you actually earn.

Sources and references

Frequently asked questions

What is the break-even formula?

In units, divide fixed costs by the unit contribution margin. In revenue, divide fixed costs by the contribution margin ratio.

What is contribution margin?

It is the selling price before tax minus the variable cost directly tied to one unit. Its first job is to absorb fixed costs; only once they are covered does it turn into profit.

What is the difference between the break-even point and the time to break even?

The break-even point is the level of activity, in units or revenue, needed to cover your costs. The time to break even is the date or the period it takes to reach that level at your current sales pace.

Why are units rounded up?

The theoretical result can include a fraction of a unit. For a product you cannot split, you have to reach the next whole unit to actually cover your costs.

What if variable cost exceeds selling price?

Each sale then destroys margin, so no positive break-even point can be reached under those assumptions.

How is the monthly target calculated?

In the advanced options, the tool divides break-even units and revenue by the number of months in the reference period: 12 for a year, 3 for a quarter, 1 for a month. With 500 units a year, the average target is about 41.7 units per month.

Does the calculation include VAT or sales tax?

No. Selling price, variable cost and break-even revenue are amounts before tax: tax collected is not revenue for the business and does not help cover fixed costs.

What happens to break-even if I cut my price by 10%?

With €10,000 of fixed costs and a €30 variable cost, going from €50 to €45 cuts the unit margin from €20 to €15: break-even rises from 500 to 667 units. A small price cut often requires many more sales.

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