Break Even Point Calculator
Find how many units you must sell, and how much revenue you need, to cover your fixed costs, with an optional profit target.
The break-even point is where sales cover all costs and profit is zero. Divide fixed costs by the contribution margin per unit, which is price minus variable cost. With $12,000 of fixed costs, a $50 price and a $30 variable cost, each unit contributes $20, so you break even at 600 units, or $30,000.00 of revenue.
This calculator is for general education. It is not financial advice or business advice. It assumes one product, a fixed price, a fixed variable cost per unit and fixed costs that do not change with volume; real businesses face discounts, product mixes, taxes and costs that step up as sales grow. Check the result against your own accounts or with an accountant before relying on it.
Units to break even
600
- Exact units
- 600.00
- Break-even revenue
- $30,000.00
- Revenue at the whole units
- $30,000.00
- Contribution margin per unit
- $20.00
- Contribution margin ratio
- 40.00%
Assumes one product, a fixed price and a fixed variable cost per unit. Not financial advice.
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About the Break Even Point Calculator
Each unit sold brings in its price minus its variable cost, such as materials. That contribution margin pays toward fixed costs such as rent. Break-even comes when those contributions add up to the fixed costs. In the example above, $50 - $30 = $20.00 per unit, and $12,000 / $20 = 600 units. The same answer in dollars uses the contribution margin ratio, $20 / $50 = 0.40, or 40.00%: $12,000 / 0.40 = $30,000.00 of revenue. Often the division does not come out even. With $10,000 of fixed costs, a $25 price and an $18 variable cost, the margin is $7 and the exact answer is 1,428.57 units. Since part of a unit cannot be sold, the calculator rounds up to 1,429, which brings in $35,725.00 against an exact break-even revenue of $35,714.29. To aim for a profit, add the target to the fixed costs: with an $8,000 target in the first example you need 1,000 units, or $50,000.00. The method assumes one product with a fixed price, a fixed variable cost per unit and total fixed costs that do not change with volume, so discounts or a mix of products change the answer.
Frequently asked questions
How do I calculate the break-even point?+
Subtract the variable cost per unit from the price to get the contribution margin, then divide your fixed costs by it. With a $50 price, a $30 variable cost and $12,000 of fixed costs, $12,000 / $20 = 600 units.
How do I find the break-even point in dollars?+
Divide fixed costs by the contribution margin ratio, the margin as a share of the price. In the example, $20 / $50 is 0.40, or 40.00%, and $12,000 / 0.40 = $30,000.00 of revenue. It is the same as break-even units times the price.
What if the price is not higher than the variable cost?+
Then each sale adds nothing, or loses money, before fixed costs, so no number of units breaks even. The calculator says so instead of giving a number. In the formula, only a higher price or a lower variable cost makes the margin positive.
How do I include a profit goal?+
Add the profit you want to the fixed costs and divide by the contribution margin. In the example, ($12,000 + $8,000) / $20 = 1,000 units. Enter the goal in the target profit field and the calculator does this for you.
Method: OpenStax, Principles of Accounting, Volume 2: Managerial Accounting (2019), section 3.2.
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