Breakeven Point Calculator

Calculate how many units you need to sell to cover your fixed and variable costs. Free balance point.

Total fixed costs Sales price per unit Variable cost per unit

What is a break even point?

The break even point is the sales volume at which your total revenue equals your total costs, so profit is exactly zero. Every unit sold beyond it adds profit; every unit below it is a loss. This break even calculator tells you how many units you must sell, and how much revenue that represents, from three numbers: fixed costs, selling price per unit and variable cost per unit.

Break even formula

Break even units = fixed costs ÷ (price per unit − variable cost per unit). The denominator is the contribution margin: the amount each sale contributes toward covering fixed costs. Break even revenue = break even units × price per unit, or equivalently fixed costs ÷ contribution margin ratio, where the ratio is contribution margin ÷ price.

Break even example

A coffee cart has fixed costs of $3,000 a month (permit, equipment lease, insurance). It sells a drink for $5 and each drink costs $1.50 in cups, coffee and milk. Contribution margin = $5 − $1.50 = $3.50. Break even = 3,000 ÷ 3.50 = 857.14, so the owner needs to sell 858 drinks a month (always round up) to cover costs, which is $4,290 in revenue. Selling 1,200 drinks gives a profit of 1,200 × 3.50 − 3,000 = $1,200.

How to lower your break even point

Cut fixed costs: renegotiate rent, subscriptions and leases.
Raise the price: each extra dollar of price goes straight into contribution margin.
Reduce variable cost per unit: cheaper suppliers, bulk buying, less waste.
Improve the mix: push products with the highest contribution margin.

Margin of safety

Margin of safety = (expected sales − break even sales) ÷ expected sales. If you expect 1,200 drinks and break even is 858, the margin of safety is 28.5 %: sales can drop by that much before you lose money.

Results are estimates for planning. Real businesses should also account for taxes, discounts, step-fixed costs and seasonality.

How to use the break even calculator

Enter your total fixed costs for the period (rent, salaries, insurance, loan payments).
Enter the selling price per unit and the variable cost per unit (materials, packaging, commissions).
Press calculate to see the break even units and break even revenue.

Frequently asked questions

How do you calculate the break even point?

Divide fixed costs by the contribution margin (price per unit minus variable cost per unit). The result is the number of units you must sell to cover all costs. Multiply by the price to get break even revenue.

What is the difference between fixed and variable costs?

Fixed costs stay the same whatever you sell (rent, insurance, salaries). Variable costs rise with each unit sold (materials, packaging, shipping, sales commissions).

Why do I round the break even units up?

You cannot sell a fraction of a unit, and selling the lower whole number leaves you slightly short of covering costs. Round up to the next whole unit.

What does a negative or impossible result mean?

If the price per unit is equal to or lower than the variable cost per unit, the contribution margin is zero or negative and you can never break even. Raise the price or cut variable costs.

What is a good margin of safety?

Higher is safer. Many small businesses aim for 20 % or more, meaning sales could fall by a fifth before the business starts losing money.

Is the break even calculator free?

Yes. It is free, needs no registration and calculates in your browser, so your numbers are not sent or stored on any server.