Break-Even Point Calculator
Units and revenue needed before you make a profit.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Break-even units
- 297 per month
- Break-even revenue
- $13,365.00
- Contribution margin
- $27.00 per unit
- Contribution margin ratio
- 60%
Quick answer
The break-even point in units is fixed costs ÷ (price per unit − variable cost per unit). The bottom half of that is the contribution margin: what each sale contributes toward overheads. With $8,000 of monthly fixed costs, a $45 price and an $18 variable cost, each unit contributes $27, so you need 297 units a month (about $13,365 in sales) to break even.
What the Break-Even Point calculator does
This calculator finds the number of units you need to sell each month to cover your fixed costs, the revenue that represents, and your contribution margin per unit and as a percentage of price. Above the break-even point every extra unit adds its contribution margin to profit; below it, each missing sale is a loss of the same amount.
Use it when pricing a new product, testing whether a business idea or a cafe can cover its rent and wages, deciding whether a price cut needs more volume than you can realistically sell, or setting a monthly sales target. It also answers the reverse question, the break-even price for a volume you expect to sell, explained below.
The model assumes a single product (or an average across your range), a constant price and variable cost per unit, and fixed costs that do not change within the volume you are considering. For the margin on each sale, see the profit margin calculator.
The formula
Break-even units = F ÷ (P − V) Break-even revenue = break-even units × P Contribution margin ratio = (P − V) ÷ P Break-even price = V + F ÷ expected units
| Symbol | Meaning | Unit |
|---|---|---|
| F | Fixed costs for the period: rent, salaries, insurance, software, loan payments | $ per month |
| P | Selling price per unit, net of discounts and sales tax | $ |
| V | Variable cost per unit: materials, packaging, payment fees, shipping, sales commission | $ |
| P − V | Contribution margin per unit | $ |
This is cost-volume-profit (CVP) analysis as taught in managerial accounting. The calculator rounds break-even units up to a whole unit, because you cannot sell a fraction of one. For a multi-product business, use a weighted-average price and variable cost based on your sales mix, or divide fixed costs by the contribution margin ratio to get break-even revenue directly.
Worked examples
Coffee shop: cups per month
A small cafe has $14,500 of monthly fixed costs (rent, staff, utilities, equipment lease). An average drink sells for $4.75 and costs $1.45 in coffee, milk, cup and card fees.
Inputs
- Fixed costs per month14500 $
- Price per unit4.75 $
- Variable cost per unit1.45 $
Result
- Break-even units4,394 per month
- Break-even revenue$20,871.50
- Contribution margin$3.30 per unit
- Contribution margin ratio69.5%
About 4,400 drinks a month, or roughly 147 a day if open every day. If the cafe can only realistically sell 120 a day, it needs higher prices, food sales with better margins, or lower rent.
Online store selling one product
A seller has $2,500 a month in fixed costs (software, storage, a part-time assistant). The product sells for $49 and costs $21 to make, pack and ship.
Inputs
- Fixed costs per month2500 $
- Price per unit49 $
- Variable cost per unit21 $
Result
- Break-even units90 per month
- Break-even revenue$4,410.00
- Contribution margin$28.00 per unit
- Contribution margin ratio57.1%
90 sales a month to break even. If ads cost money per order, include that in the variable cost, otherwise this target will be too low.
Small manufacturer
A workshop building $1,200 furniture pieces with $700 of materials and direct labor each has $120,000 of monthly fixed overhead.
Inputs
- Fixed costs per month120000 $
- Price per unit1200 $
- Variable cost per unit700 $
Result
- Break-even units240 per month
- Break-even revenue$288,000.00
- Contribution margin$500.00 per unit
- Contribution margin ratio41.7%
240 pieces a month, $288,000 in revenue. With a 41.7% contribution margin ratio, every $1,000 of sales above break-even adds about $417 to profit.
Working out a break-even price
If you know how many units you can sell, flip the formula to find the lowest price that covers costs:
Break-even price = variable cost per unit + fixed costs ÷ expected units
With $8,000 of fixed costs, an $18 variable cost and 250 expected sales a month, the break-even price is 18 + 8,000 ÷ 250 = $50. Any price above that earns a profit at that volume. Try different volumes in this calculator to see how sensitive the break-even point is to price: a small price rise often cuts the units needed much more than you would expect, because the whole increase goes to contribution margin.
Fixed vs variable costs: what goes where
Misclassifying costs is the most common reason break-even targets turn out wrong.
| Cost | Usually | Notes |
|---|---|---|
| Rent and business rates | Fixed | Steps up only if you move or expand |
| Salaried staff | Fixed | Hourly staff scheduled to demand are partly variable |
| Raw materials and packaging | Variable | Per unit sold |
| Card processing and marketplace fees | Variable | A percentage of each sale |
| Shipping to customers | Variable | Unless you charge it separately |
| Software subscriptions and insurance | Fixed | Monthly or annual |
| Ad spend | Either | Treat as variable if you can measure cost per order |
| Loan repayments | Fixed | Include them if you want cash break-even |
Using the result
- Margin of safety: how far expected sales sit above break-even. Selling 400 units with a break-even of 297 gives a margin of safety of about 26%.
- Time to break even for a new business is a different question: it depends on start-up costs and how fast sales ramp up. The payback period calculator handles that.
- Restaurants and cafes should set the variable cost from actual food cost, not recipe cards; the food cost percentage calculator gives the real figure.
How to use the Break-Even Point Calculator
- 1Add up fixed costs for one month: rent, salaries, insurance, subscriptions, loan payments.
- 2Enter your average selling price per unit, excluding sales tax or VAT.
- 3Enter the variable cost per unit, including materials, packaging, payment fees and shipping.
- 4Read break-even units and revenue; adjust price or costs to test scenarios.
Frequently asked questions
How do you calculate the break-even point?
Divide fixed costs by the contribution margin per unit (price minus variable cost). $10,000 of fixed costs with a $25 margin per unit needs 400 units.
How do I calculate break-even revenue without unit numbers?
Divide fixed costs by the contribution margin ratio. If fixed costs are $20,000 and 40% of each sale is contribution margin, break-even revenue is $50,000.
What is contribution margin?
It is the price per unit minus the variable cost per unit: the amount each sale contributes toward fixed costs and then profit.
How do I lower my break-even point?
Raise prices, reduce variable cost per unit, or cut fixed overhead. Price increases usually have the biggest effect, because the whole increase adds to contribution margin.
What if my price is lower than my variable cost?
Then you can never break even, because every sale loses money before fixed costs. The calculator shows an error in that case.
References
- Horngren's Cost Accounting: A Managerial Emphasis — Pearson
- Managerial Accounting (Garrison, Noreen & Brewer) — McGraw Hill
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
- Report an error