Break-even Price Calculator
Calculate your break-even price
The break-even price is the minimum price you must charge per unit to cover all costs. This includes both fixed costs (such as rent, salaries, and software) and variable costs (such as materials, packaging, and transaction fees).
This calculator helps you determine the exact price required to avoid losses based on your expected sales volume. It is a critical tool for pricing strategy, especially when launching new products or adjusting your pricing model.
If you price below your break-even point, you will lose money on every sale. If you price above it, you begin generating profit on each unit sold.
Understanding your result
The result shows the minimum price you must charge per unit to cover all costs. This includes both fixed costs allocated per unit and variable costs.
If your actual selling price is below this number, your business is losing money on every sale. Once you exceed this price, you begin generating profit per unit.
This makes break-even price a critical benchmark when setting pricing strategies or launching new products.
How it works
Formula:
Break-even Price = (Fixed Costs ÷ Units Sold) + Variable Cost
The calculation distributes fixed costs across each unit sold and adds variable costs to determine the minimum viable price.
How to improve your pricing strategy
- Increase sales volume: More units reduce fixed cost per unit.
- Reduce fixed costs: Lower overhead reduces required price.
- Reduce variable costs: Improve supplier pricing or efficiency.
- Optimise pricing: Price above break-even to ensure profit.
Understanding your break-even price allows you to confidently price your products without risking losses.
Examples
Example 1:
Fixed = £2,000
Units = 200
Variable cost = £8
Break-even price = £18
Example 2:
Fixed = £750
Units = 50
Variable cost = £4.50
Break-even price = £19.50
Example 3 (Ecommerce):
Fixed = £5,000
Units = 500
Variable = £12
Break-even price = £22
This ensures all costs are covered before profit begins.
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Frequently asked questions
What is break-even price?
Break-even price is the minimum price you must charge per unit to cover both fixed and variable costs.
Why is break-even price important?
It helps ensure you do not sell products at a loss and supports pricing decisions.
What happens if I price below break-even?
You will lose money on every unit sold unless compensated by other revenue streams.
Can I price above break-even?
Yes, pricing above break-even generates profit.
What if my expected units change?
Lower sales volume increases required break-even price.