The break-even point is where total revenue equals total costs — no profit, no loss. Every unit sold after that point contributes profit. Use it to sanity-check prices and business plans.
How to use the Break-Even Calculator
- 1 Enter total fixed costs for the period (rent, salaries, software…).
- 2 Enter the selling price per unit and the variable cost per unit.
- 3 Read the units and revenue needed to break even.
Formula
Break-even units = Fixed costs ÷ (Price − Variable cost per unit) Break-even revenue = Break-even units × Price
Worked examples
Input: Fixed $3,000/mo, price $4.50, variable $1.50
Result: 1,000 cups
Break-even revenue $4,500
Contribution margin
Each unit sold "contributes" its price minus its variable cost toward fixed costs. The contribution margin ratio is that contribution as a share of price. The higher it is, the fewer sales you need to break even and the faster profit grows afterwards.
Using break-even analysis
- Pricing: see how a price change moves the break-even point.
- Cost control: reducing variable costs raises the contribution margin.
- Planning: compare the break-even volume with realistic sales forecasts before committing to fixed costs.
Frequently asked questions
What if the price is lower than the variable cost?
Then every sale loses money and you can never break even — the calculator will tell you so.
Are fixed costs monthly or yearly?
Either; just keep the period consistent. The result is the units needed in that same period.
Why is the unit count rounded up?
You cannot sell a fraction of a unit, so you need the next whole unit to fully cover costs.
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