Break-Even Analysis Calculator

What is break-even analysis?

Break-even analysis shows the sales volume at which your total revenue equals your total costs. At this point, your profit is zero: you are not losing money, but you are not making a profit yet either.

It is a core tool in managerial accounting and financial planning, used for pricing decisions, cost control, and evaluating new products or business models.

Key concepts

• Fixed costs: Costs that do not change with sales volume in the short term (e.g., rent, salaries, insurance, software).
• Variable costs: Costs that increase with each additional unit sold (e.g., materials, packaging, transaction fees, shipping).
• Selling price per unit: The price you charge per unit of product or service.
• Contribution margin: The amount each unit contributes to covering fixed costs and profit.

Break-even point formulas

Once you know your contribution margin, you can compute the break-even point in units or in sales dollars.

Target profit and required sales

You can extend break-even analysis to find how many units you must sell to reach a specific profit target.

Margin of safety

The margin of safety tells you how much your sales can fall before you reach the break-even point and start incurring losses.

Worked example

Suppose you run a small e‑commerce business with the following numbers per month:

• Fixed costs: $10,000
• Selling price per unit: $50
• Variable cost per unit: $20
• Expected sales volume: 500 units

1. Contribution margin per unit: \[ 50 - 20 = 30 \]
2. Break-even units: \[ \frac{10{,}000}{30} \approx 333.33 \text{ units} \] You must sell about 334 units to break even.
3. Break-even sales: \[ 333.33 \times 50 \approx 16{,}666.50 \]
4. Profit at 500 units:
   • Revenue = \(500 \times 50 = 25{,}000\)
   • Variable costs = \(500 \times 20 = 10{,}000\)
   • Total costs = 10,000 (fixed) + 10,000 (variable) = 20,000
   • Profit = 25,000 − 20,000 = 5,000
5. Margin of safety: \[ \text{MOS (units)} = 500 - 333.33 \approx 166.67 \] \[ \text{MOS \%} = \frac{166.67}{500} \times 100\% \approx 33.3\% \]

How to use this break-even analysis calculator

1. Choose your currency and time period (month, year, week, or day).
2. Enter your total fixed costs for that period.
3. Enter your selling price per unit and variable cost per unit.
4. Optionally, enter your expected sales volume and a target profit.
5. Click “Calculate break-even” to see:
   • Contribution margin per unit and ratio
   • Break-even units and sales
   • Margin of safety and profit at expected sales
   • Units required to reach your target profit
6. Use the scenario slider and chart to explore how profit changes with volume.

Tips and best practices

• Be conservative with fixed costs: Include all recurring overheads, even if they are billed annually (allocate them to the chosen period).
• Use realistic variable costs: Don’t forget payment processing fees, returns, and customer support time.
• Run multiple scenarios: Test optimistic, base, and pessimistic assumptions for price, costs, and volume.
• Combine with cash flow planning: Break-even analysis focuses on profit, not cash timing. For capital-intensive businesses, also model cash flows.

Frequently asked questions

Is break-even analysis only for new businesses?

No. Established businesses use break-even analysis to evaluate new products, price changes, cost-cutting initiatives, and expansion decisions.

How often should I update my break-even analysis?

Update it whenever your cost structure or pricing changes significantly—typically at least once per year, and more often for fast-changing businesses.

Can I use this calculator for multiple products?

This tool assumes a single product or a stable average selling price and variable cost per unit. For multiple products, you can:

• Compute a weighted average selling price and variable cost based on your sales mix, or
• Run separate analyses for each major product line.