Break Even Calculator
Model your fixed and variable costs, find your break-even units and revenue, and compare up to three pricing scenarios with instant charts.
Inputs
Rent, salaries, insurance, software, etc. for the period you are analyzing.
Materials, packaging, transaction fees, sales commissions, etc.
Contribution margin ÷ revenue. For example, 40% means you keep 40 cents of every dollar after variable costs.
Used to show after-tax profit. Break-even itself is pre-tax.
Set a profit goal to see the sales needed to reach it.
Used to compute margin of safety and profit at this volume.
Scenarios Use to compare pricing or cost structures
Uses the main inputs on the left.
Turn on scenario comparison to see a summary table of A, B, and C below.
Key results
Profit vs. units
The break-even point is where the profit line crosses zero. Adjust inputs to see how the curve moves.
How this break even calculator works
This break even calculator helps you understand how many units you need to sell, or how much revenue you need to generate, to cover all of your costs. It supports both a per-unit model (price and variable cost per unit) and a revenue-only model (contribution margin ratio).
Core break-even formulas
1. Contribution margin per unit
\[ \text{CM per unit} = P - V \]
Where:
- \(P\) = selling price per unit
- \(V\) = variable cost per unit
2. Contribution margin ratio
\[ \text{CM ratio} = \frac{P - V}{P} \]
3. Break-even units
\[ Q_{BE} = \frac{F}{P - V} \]
Where \(F\) = total fixed costs for the period.
4. Break-even revenue (per-unit model)
\[ R_{BE} = Q_{BE} \times P \]
5. Break-even revenue (revenue-only model)
\[ R_{BE} = \frac{F}{\text{CM ratio}} \]
6. Profit at a given volume
\[ \text{Profit} = Q \times (P - V) - F \]
7. Margin of safety
\[ \text{MOS (units)} = Q_{\text{expected}} - Q_{BE} \]
\[ \text{MOS (\%)} = \frac{Q_{\text{expected}} - Q_{BE}}{Q_{\text{expected}}} \times 100 \]
8. Units for a target profit
\[ Q_{\text{target}} = \frac{F + \Pi_{\text{target}}}{P - V} \]
Step-by-step: using the calculator
- Choose your model. Use the Per-unit model tab if you know your price and variable cost per unit. Use the Revenue-only model if you only know your contribution margin ratio.
- Enter fixed costs. Sum all costs that do not change with sales volume for the period you are analyzing (month, quarter, year).
- Enter price and variable cost (or margin ratio). The tool automatically computes contribution margin per unit and margin ratio.
- Set expected sales. This can be your forecast or current sales level. The calculator uses it to compute profit and margin of safety.
- Optionally add tax and target profit. Tax affects after-tax profit but not the break-even point itself. A target profit lets you see the sales needed to hit that goal.
- Review results and chart. The key metrics and the profit vs. units chart update instantly as you change inputs.
Understanding fixed vs. variable costs
Break-even analysis relies on separating your costs into fixed and variable components:
- Fixed costs stay the same regardless of how many units you sell (within a relevant range). Examples: rent, full-time salaries, insurance, software subscriptions, loan payments.
- Variable costs move with each unit sold. Examples: raw materials, packaging, shipping, payment processing fees, sales commissions, usage-based licenses.
If a cost is partly fixed and partly variable (for example, a base salary plus commission), you can split it into both parts or approximate it as whichever component is more significant.
Interpreting the margin of safety
The margin of safety tells you how much your sales can fall before you start losing money. A higher margin of safety means your business is more resilient to downturns.
- Low margin of safety (e.g., <10%) means even a small drop in sales could push you below break-even.
- High margin of safety (e.g., >30%) means you have more buffer to absorb volatility.
Common ways to improve your break-even point
- Increase price (if your market allows it) to raise contribution margin per unit.
- Reduce variable costs by negotiating with suppliers, optimizing packaging, or improving production efficiency.
- Reduce fixed costs such as rent, overhead, or non-essential subscriptions.
- Shift to higher-margin products or services to increase your average contribution margin.
Limitations of break-even analysis
- Assumes a linear relationship between volume, revenue, and costs.
- Assumes a constant selling price and variable cost per unit within the analyzed range.
- Does not account for capacity constraints, step-fixed costs, or complex pricing tiers.
- Works best as a planning tool rather than a precise prediction.
FAQ
What is the break-even point?
The break-even point is the sales level where total revenue equals total costs, so profit is exactly zero. Above this point you make a profit; below it you incur a loss.
How do I choose the time period?
You can use any period (month, quarter, year) as long as you are consistent. Fixed costs, price, variable cost, and expected sales should all be expressed for the same period.
Can I use this for services or SaaS?
Yes. Treat a “unit” as one subscription, one project, one billable hour, or any consistent measure of output. Estimate the variable cost per unit (support, hosting, payment fees, etc.) and proceed as usual.
Does tax change the break-even point?
The classical accounting break-even point is calculated before tax, so tax does not change it. However, if you are targeting a specific after-tax profit, you can adjust your target profit to account for tax, which this calculator does when showing after-tax profit.
Can this calculator handle multiple products?
This tool assumes a single average selling price and variable cost per unit. For multiple products, approximate by using a weighted-average price and variable cost based on your expected sales mix.