Break-Even Calculator

Find unit volume and revenue needed to cover all fixed and variable costs.

Break-Even Point

Presets:

Cost & Price Inputs

Instant calculationPer-period baseline

Break-Even Target

Break-Even Sales Volume

500units

Selling 500 units yields $25,000.00 in revenue to cover $10,000.00 in fixed overhead.

Break-even revenue$25,000.00

Contribution margin per unit$20.00

Contribution margin ratio40.00%

Formulas & Logic

Transparent mathematical formulas behind this calculation engine.

Contribution Margin ($)

Contribution Margin = Selling Price - Variable Cost per Unit

The dollar amount each sold unit contributes toward paying off total fixed overhead.

Break-Even Units

Break-Even Units = Total Fixed Costs ÷ Contribution Margin

The exact sales volume required before the business begins generating net profit.

Break-Even Revenue ($)

Break-Even Revenue = Break-Even Units × Unit Selling Price

Total gross sales turnover required to cover all operating overhead.

Worked Example

Subscription Box Break-Even Point ($10k Fixed / $50 Price / $30 Var)

A subscription business incurs $10,000.00 in monthly fixed overhead. Each box sells for $50.00 with $30.00 in variable costs.

Given

Fixed Costs: $10,000.00
Selling Price: $50.00
Variable Cost: $30.00

Calculated

Break-Even Units: 500 units
Break-Even Revenue: $25,000.00
Contribution Margin: $20.00

Calculation

Contribution Margin = $50.00 - $30.00 = $20.00 per unit
Break-Even Units = $10,000.00 ÷ $20.00 = 500 units
Break-Even Revenue = 500 units × $50.00 = $25,000.00

Takeaway: Selling 500 units generates $25,000.00 in gross revenue, exactly covering the $10,000.00 fixed overhead.

Methodology & Assumptions

Underlying definitions and operational accounting principles.

Static Fixed Costs: Assumes fixed costs remain unchanged across the modeled sales volume range.
Linear Variable Costs: Assumes per-unit production costs remain constant without volume-based step discounts.

Frequently Asked Questions

Practical answers regarding margins, markups, and pricing strategy.

How do I calculate break-even units?

To calculate break-even units, divide total fixed costs by your unit contribution margin (selling price minus variable cost per unit). Formula: Break-Even Units = Fixed Costs ÷ (Price - Variable Cost). For example, $10,000 in fixed overhead with a $20 unit contribution margin requires 500 units to break even.

What happens if variable cost exceeds selling price?

If variable cost is greater than or equal to selling price, each unit sold loses money. A break-even point is mathematically impossible until unit price increases or variable costs decrease.

What is contribution margin ratio?

The contribution margin ratio is contribution margin divided by selling price. It represents the percentage of each sales dollar available to cover fixed costs.