Break-Even Calculator
Calculate the point at which your business becomes profitable by determining your break-even point. Enter your fixed costs, variable costs per unit, and selling price per unit to find out how many units you need to sell to break even.
Break-Even Point: 0 units
| Break-Even Revenue | $0.00 |
|---|---|
| Total Costs at Break-Even | $0.00 |
| Profit per Unit | $0.00 |
| Contribution Margin | 0% |
About Break-Even Calculator
The break-even point is the point at which total revenue equals total costs, resulting in neither profit nor loss. Calculating your break-even point helps you understand how much you need to sell to cover your costs and when you can expect to start making a profit.
How to Calculate Break-Even Point
The break-even point is calculated using the following formula:
Break-Even Point (units) = Fixed Costs ÷ (Price per Unit - Variable Cost per Unit)
Where:
- Fixed Costs are expenses that do not change with the number of units produced (e.g., rent, salaries, insurance)
- Variable Costs are expenses that vary directly with the number of units produced (e.g., materials, labor, shipping)
- Price per Unit is the selling price of each unit
Why Break-Even Analysis Matters
Break-even analysis is essential for:
- Determining the minimum sales needed to cover costs
- Setting sales targets and pricing strategies
- Evaluating the financial feasibility of a business or product
- Making informed decisions about cost structures and pricing
Contribution Margin
The contribution margin is the amount each unit contributes to covering fixed costs and generating profit. It's calculated as:
Contribution Margin = (Price per Unit - Variable Cost per Unit) ÷ Price per Unit
A higher contribution margin means each unit sold contributes more to covering fixed costs and generating profit.