What the break-even point is
The break-even point is the sales level at which your business makes neither a profit nor a loss: revenue exactly equals total costs. Below it you operate at a loss; above it, every extra sale starts producing profit. Knowing where that line sits is one of the most important checks before you launch a product, set a price, or sign a lease.
This calculator answers one very concrete question: how many units do I have to sell to stop losing money? Everything runs in your browser — we never store or upload your numbers.
How to use the calculator
You need three figures from your business:
- Total fixed costs: what you pay no matter how much you sell (rent, fixed salaries, insurance, utilities, software licenses). Measured per period, usually per month.
- Selling price per unit: what you charge the customer for each unit.
- Variable cost per unit: what it costs you to make or deliver one unit (raw materials, packaging, sales commission, shipping).
The tool returns the number of units you must sell to cover everything, the revenue that represents, and the contribution margin of each unit.
The contribution margin
The heart of the calculation is the contribution margin per unit: what’s left from each sale after paying that unit’s variable cost. That leftover is what “contributes” toward covering your fixed costs.
Contribution margin = price − variable cost
Once your accumulated margins cover all the fixed costs, you break even:
Break-even units = fixed costs ÷ contribution margin
Break-even revenue = break-even units × price
Worked example
Picture a small bakery with fixed costs of $10,000 per month. It sells each cake for $50 and it costs $30 to make one:
- Contribution margin: 50 − 30 = $20 per cake
- Break-even units: 10,000 ÷ 20 = 500 cakes
- Break-even revenue: 500 × 50 = $25,000
In other words: by selling 500 cakes a month, the bakery exactly covers its costs. Cake number 501 already leaves $20 of clean profit.
| Item | Value |
|---|---|
| Fixed costs | $10,000 |
| Price per unit | $50 |
| Variable cost per unit | $30 |
| Contribution margin | $20 |
| Break-even units | 500 |
| Break-even revenue | $25,000 |
Frequently asked questions
What happens if the contribution margin is negative?
If the variable cost is equal to or higher than the price, every sale loses money and you can never break even: selling more only deepens the loss. The calculator warns you in that case. The fix isn’t to sell more — it’s to raise the price or lower the variable cost per unit.
How can I lower my break-even point?
You have three levers: cut fixed costs (renegotiate rent, drop unnecessary overhead), raise the selling price, or reduce the variable cost per unit (better suppliers, less waste). Any of the three lowers the number of units you need to sell to avoid losing money.
What’s the difference between fixed and variable costs?
Fixed costs don’t change with sales volume: rent is the same whether you sell 10 units or 1,000. Variable costs rise and fall with each unit: if you produce nothing, you pay nothing. Classifying each expense correctly is what makes a break-even estimate realistic.
Does it work for services, not just products?
Yes. Treat each “unit” as a billable hour, a client, or a standard project. The price is your rate and the variable cost is what it takes to deliver that service (commissions, materials, subcontracting). The contribution-margin logic is exactly the same.