Break-Even Point Calculator

The Formula

The break-even point is the sales volume at which total revenues equal total costs — neither profit nor loss is made. It is the most fundamental question every business owner must answer before launching a product.

Variable Definitions

How to Use This Calculator

1. 1

   Enter your total monthly or annual fixed costs.

2. 2

   Enter the selling price per unit.

3. 3

   Enter the variable cost per unit (materials, packaging, payment processing fees).

4. 4

   The break-even point tells you exactly how many units you must sell to cover all costs.

5. 5

   Use the result to assess whether your target sales volume is realistic for your market size.

Common Applications

• Determining the minimum number of units a new product must sell each month to cover fixed costs before launching
• Evaluating whether a product pricing strategy is viable by calculating how many sales are needed just to break even
• Assessing the impact of cost changes — if supplier prices rise, how many more units must be sold to maintain profitability

Break-even is where total revenue equals total costs — sell more and you profit, sell less and you lose

Understanding the Concept

The break-even analysis is foundational for any product or business. It tells you the minimum sales volume required to avoid losses. Every unit sold beyond break-even contributes directly to profit at the contribution margin rate. For example, if fixed costs are $10,000, selling price is $50, and variable cost is $20, the contribution margin is $30 per unit and break-even is 334 units. Unit 335 generates $30 of pure profit. This analysis helps with pricing decisions, cost control, and evaluating new product viability. A practical edge case: if your selling price is $25 and variable cost is $25, the contribution margin is $0 and break-even never occurs — you lose your fixed costs every period. This is why businesses must ensure price exceeds variable cost. Another scenario: a software startup with $50,000 in monthly fixed costs (engineering salaries, hosting) selling a $100 per month subscription with $5 per month variable cost (hosting, support). The contribution margin is $95 per month, so break-even is just 527 subscribers — achievable for most B2B SaaS products. A coffee shop with $8,000 in monthly fixed costs selling coffee at $4.50 with $1.20 variable cost per cup has a contribution margin of $3.30 per cup. Break-even is 2,424 cups per month, or about 81 cups per day — which is achievable for a shop in a decent location but challenging for a new business in a low-traffic area.

Frequently Asked Questions

Sources & References