How do you calculate the break-even point?

Divide fixed costs by the contribution margin per unit (price minus variable cost). Rent and salaries of 30,000 a month, a price of 40 and variable cost of 25: 30,000 ÷ 15 = 2,000 units a month. Times the price, that is 80,000 of sales.

How do I calculate break-even in sales dollars?

Divide fixed costs by the contribution margin ratio, the margin as a share of the price. With a 40% ratio and 50,000 of fixed costs: 50,000 ÷ 0.40 = 125,000 of sales.

What is contribution margin?

What each sale leaves after its own variable costs: price minus variable cost per unit. It is what 'contributes' to covering fixed costs and, after break-even, to profit. As a ratio, it is that margin divided by the price.

How can I lower my break-even point?

Raise the price, cut the variable cost per unit, or cut fixed costs. Raising the price by 5 on a 50 product with a 20 margin cuts break-even from 2,500 units to 2,000 — a 20% drop from a 10% price rise.

How many units do I need to sell to make a profit of a certain amount?

Add the target profit to the fixed costs and divide by the contribution margin: (fixed + target) ÷ (price − variable cost). Enter the target above and the page shows the units and revenue.

Break-Even Calculator (Units, Revenue and Target Profit)

Break-even point in units and revenue from fixed costs, price and variable cost per unit, the units for a target profit, and profit at volumes around it.

Inputs

CurrencyAuto (USD)

Fixed costs

$0$515,500

Price per unit

$0$10,300

Variable cost per unit

$0$10,300

Target profit (optional)

$0$515,500

Include CalculateEveryday mark

Break-even units

2,500

Variable cost/unit$30.00

Price/unit$50.00

+40%

Profit at volumes around break-even

Units sold	Revenue	Profit or loss
1,250	$62,500	-$25,000.00
1,875	$93,750	-$12,500.00
2,500	$125,000	$0.00
3,125	$156,250	$12,500
3,750	$187,500	$25,000

Working: fixed costs ÷ (price − variable cost per unit) = 2500.00 units, rounded up
Contribution margin per unit: $20.00
Contribution margin ratio: 40.00% of the price
Fixed costs: $50,000
Break-even revenue: $125,000
Break-even revenue (fixed costs ÷ margin ratio): $125,000

Use this calculator on your own site

Free embed

Two lines of HTML, unlimited views
Shows a small CalculateEveryday bar, with a credit link under the calculator

What each Break-Even input means

Fixed costs: Costs that don't change with sales over the period: rent, salaries, insurance, software subscriptions, loan payments. Use the same period — a month or a year — as the sales you have in mind.
Price per unit: The selling price per unit, after any typical discount and before sales tax.
Variable cost per unit: What each extra unit costs you: materials, packaging, shipping, payment fees, sales commission.
Target profit (optional): Optional: the profit you want over the same period. The page adds it to fixed costs and shows the units and revenue needed.

Break-Even formula

Break-even units = fixed costs ÷ (price − variable cost per unit) · break-even revenue = fixed costs ÷ contribution margin ratio · units for a target profit = (fixed costs + target) ÷ contribution margin

Q_{BE} = \dfrac{F}{p - v}

The break-even point is the sales volume at which revenue exactly covers costs, so there is neither profit nor loss. Cost-volume-profit analysis, as OpenStax's managerial accounting text sets it out, splits costs in two: fixed costs such as rent and salaries, which stay the same however much you sell, and variable costs such as materials and shipping, which rise with every unit. Each sale brings in its price, pays its own variable cost, and the rest — the contribution margin — goes toward the fixed costs. Divide the fixed costs by the contribution margin per unit and you have the number of units to break even; the page rounds up, since you cannot sell part of a unit. The same point in money is the fixed costs divided by the contribution margin ratio, the share of each sale's price left after variable cost. Add a target profit and it is treated as one more fixed cost to cover, giving the units you need to reach it. The table shows profit or loss at half, three-quarters, one-and-a-quarter, one-and-a-half and twice the break-even volume.

Break-Even worked example

With $50,000 in fixed costs, a $50 selling price and $30 variable cost per unit, each sale contributes $20 toward overhead — a 40% contribution margin ratio. 50,000 ÷ 20 = 2,500 units to break even, which is $125,000 of sales (50,000 ÷ 0.40). Sell unit 2,501 and you're into profit; at 3,750 units the profit is $25,000.

More Break-Even examples

A small business with $12,000 a month of fixed costs sells at $25 with $10 of variable cost. Each unit contributes $15, so break-even is 12,000 ÷ 15 = 800 units, or $20,000 of sales. To make $6,000 profit it needs (12,000 + 6,000) ÷ 15 = 1,200 units.

Where the Break-Even calculator can give the wrong answer

Price must be above variable cost. If each sale costs as much as it brings in, no volume ever covers fixed costs, and the page says so.
It assumes one product, or an average across products. With several products at different margins, the break-even point depends on the sales mix; use a weighted average contribution margin.
Costs are assumed to behave in straight lines. In practice fixed costs step up (a second shop, another hire) and variable costs can fall with bulk buying, so break-even holds only within a sensible range.
Units are rounded up; revenue is shown two ways — the rounded units times the price, and fixed costs ÷ margin ratio — which differ by less than one unit's price.
Break-even ignores taxes and the timing of cash. A business can be profitable on paper and still run short of cash while waiting to be paid.

Spotted a mistake? Tell us

Break-Even reference table

Break-even units for 50,000 of fixed costs
Contribution margin per unit	Units to break even
5	10,000
10	5,000
20	2,500
25	2,000
50	1,000

Source: Fixed costs ÷ contribution margin per unit (OpenStax Managerial Accounting §3.2)

Break-Even FAQ

: Divide fixed costs by the contribution margin per unit (price minus variable cost). Rent and salaries of 30,000 a month, a price of 40 and variable cost of 25: 30,000 ÷ 15 = 2,000 units a month. Times the price, that is 80,000 of sales.
: Divide fixed costs by the contribution margin ratio, the margin as a share of the price. With a 40% ratio and 50,000 of fixed costs: 50,000 ÷ 0.40 = 125,000 of sales.
: What each sale leaves after its own variable costs: price minus variable cost per unit. It is what 'contributes' to covering fixed costs and, after break-even, to profit. As a ratio, it is that margin divided by the price.
: Raise the price, cut the variable cost per unit, or cut fixed costs. Raising the price by 5 on a 50 product with a 20 margin cuts break-even from 2,500 units to 2,000 — a 20% drop from a 10% price rise.
: Add the target profit to the fixed costs and divide by the contribution margin: (fixed + target) ÷ (price − variable cost). Enter the target above and the page shows the units and revenue.