Break-Even Calculator
Help businesses determine their break-even point
Input Your Data
Results
Break-Even Point
Units
0
Revenue
$0
Contribution Margin
Per Unit
$0
Ratio
0%
Enter your business data and click calculate to see your break-even analysis
How Break-Even Analysis Works
Break-even analysis helps you understand exactly how many units you need to sell to cover all your costs.
The Formula
Break-even point in units = Fixed Costs ÷ (Selling Price per Unit – Variable Cost per Unit)
Fixed Costs
Expenses that remain constant regardless of sales volume (rent, salaries, insurance)
Variable Costs
Costs that change with each unit produced (materials, direct labor, packaging)
Contribution Margin
The amount each unit contributes to covering fixed costs (Selling Price – Variable Cost)
By calculating your break-even point, you can set clear sales targets and make informed decisions about pricing, costs, and business planning.
Example Break-Even Calculation
Coffee Shop Startup
Fixed Monthly Costs: $8,000 (rent, salaries, utilities)
Average Variable Cost: $1.50 per cup
Average Selling Price: $4.50 per cup
Break-Even Calculation:
Break-even in units = $8,000 ÷ ($4.50 – $1.50) = $8,000 ÷ $3.00 = 2,667 cups
Break-even in revenue = 2,667 cups × $4.50 = $12,000
The coffee shop needs to sell 2,667 cups per month (about 89 cups per day) to break even.
Frequently Asked Questions
What is a break-even point?
The break-even point is the level of production at which the business neither makes a profit nor incurs a loss. At this point, total revenue equals total costs.
How do I reduce my break-even point?
You can lower your break-even point by reducing fixed costs, decreasing variable costs, or increasing your selling price. Any of these changes will allow you to break even with fewer sales.
What are the limitations of break-even analysis?
Break-even analysis assumes constant selling prices and variable costs, which may not always be realistic. It’s best used as one of several business planning tools.