Break-Even Calculator
Find how many units you must sell to cover fixed and variable costs — plus the revenue that gets you there.
Contribution margin: $10.00/unit · Break-even revenue: $2,500.00.
The break-even point is where total revenue equals total cost, so profit is zero. With $1,000 in fixed costs, a $25 price, and a $15 variable cost per unit, each sale contributes $10. You need 100 units ($2,500 in revenue) to break even.
What break-even analysis tells you
Break-even analysis finds the sales volume at which a business neither makes nor loses money — total revenue exactly covers total cost. Below that point you run at a loss; above it every extra unit turns into profit. It separates two kinds of cost: fixed costs that stay the same no matter how much you sell (rent, salaries, software), and variable costs that rise with each unit (materials, packaging, payment fees). The gap between your price and the variable cost is what’s left to chip away at the fixed costs.
The denominator (price − variable cost) is the contribution margin per unit; break-even revenue = units × price
Worked example
A coffee cart has $1,000 of fixed costs, sells each cup for $25, and spends $15 of variable cost per cup.
- 1 Add up your fixed costs. Rent, salaries, and other costs that don’t change with volume — here $1,000.
- 2 Find the contribution margin per unit. Subtract the variable cost from the price: $25 − $15 = $10. Each unit contributes $10 toward fixed costs.
- 3 Divide fixed costs by the contribution margin. $1,000 ÷ $10 = 100 units — the break-even quantity.
- 4 Multiply by the price for break-even revenue. 100 × $25 = $2,500. At that revenue, profit is exactly zero.
How price and cost changes shift the break-even point
Starting from $1,000 fixed, $25 price, $15 variable cost (100 units). Raising the price or cutting the variable cost widens the contribution margin, so fewer units are needed.
| Change | Contribution margin | Break-even units | Break-even revenue |
|---|---|---|---|
| Baseline ($25 / $15) | $10 | 100 | $2,500 |
| Raise price to $30 | $15 | 67 | $2,000 |
| Cut variable cost to $10 | $15 | 67 | $1,667 |
| Variable cost rises to $20 | $5 | 200 | $5,000 |
| Fixed costs double to $2,000 | $10 | 200 | $5,000 |
Reading the result
Contribution margin is the engine. The contribution margin (price − variable cost) is how much each sale puts toward covering fixed costs and, once those are paid, toward profit. A wider margin means you break even sooner; a thin margin means you must sell far more to survive.
Above and below the line. Sell fewer units than the break-even point and you operate at a loss. Hit it exactly and profit is zero. Every unit beyond break-even adds its full contribution margin straight to profit, because the fixed costs are already covered.
Assumptions to watch. The model assumes the price and per-unit variable cost stay constant and that fixed costs don’t jump as you scale. In reality bulk discounts, price changes, or a bigger lease can move the line, so treat break-even as a planning estimate, not a guarantee.