Break-even Calculator
Calculator
Understanding Your Break-Even Point
- The Goal: Reaching break-even means your total revenue equals your total expenses—you are making zero profit but no loss.
- Fixed Costs: Costs that stay the same regardless of sales (e.g., rent, software).
- Variable Costs: Costs that increase as you sell more (e.g., shipping, materials).
This calculator helps you determine how many units you need to sell to cover your total fixed costs. The break-even point is where your business makes neither a profit nor a loss, making it one of the most important metrics in pricing and financial planning.
Understanding your break-even point allows you to set realistic sales targets, evaluate pricing strategies, and assess whether a product or business model is viable. It is especially important for ecommerce businesses, startups, and product-based businesses where cost control is critical.
By entering your fixed costs, selling price, and variable cost per unit, you can quickly see the minimum sales volume required to cover your expenses and move into profitability.
Formula: Break-even Units = Fixed Costs ÷ (Price − Variable Cost)
Result Explanation
The result shows the number of units you must sell to cover your fixed costs. Once you exceed this number, each additional sale contributes to profit.
How this tool works
The calculator finds contribution per unit by subtracting variable cost from price, then divides fixed costs by that contribution to get break-even units. If contribution is zero or negative, break-even cannot be reached because each sale does not cover its variable cost.
Examples
Example: Fixed costs £500, Price £25, Variable cost £10 → Contribution £15 → Break-even = 33.33 units
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FAQ
What is break-even point?
Break-even is the point where total revenue equals total costs, meaning no profit or loss.
Why is break-even important?
It shows the minimum sales required to avoid losses and helps guide pricing decisions.
What happens if contribution is negative?
If price is less than or equal to variable cost, you cannot reach break-even.
Can break-even be negative?
No. If contribution is zero or negative, break-even cannot be reached.
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