What is a break-even calculator?
A break-even calculator estimates how many units you need to sell, and how much revenue that represents, before the costs you included are covered. People use it to test a price, a cost structure or a sales target for one standardized product or service.
The result is an estimate for the period of the numbers you enter. It is not a cash-flow forecast, and it does not recommend a profit target.
How to calculate the break-even point
Start with three figures that belong to the same period: fixed costs, selling price per unit and variable cost per unit. Subtract variable cost from price to get contribution margin per unit. Divide fixed costs by that contribution to get exact break-even units. Divide fixed costs by the contribution margin ratio to get break-even revenue.
Example: $10,000.00 of fixed costs, a $100.00 price and a $40.00 variable cost produce a $60.00 contribution, 166.6667 exact units and $16,666.67 of break-even revenue.
What is contribution margin?
Contribution margin per unit is selling price per unit minus variable cost per unit. It is the amount left from one sale after the variable cost you included. The contribution margin ratio is that amount divided by selling price. A $60.00 contribution on a $100.00 price is 60%.
If contribution margin is zero or negative, each unit does not help cover fixed costs. This calculator then shows the contribution and does not invent a finite break-even.
How to calculate break-even units
Exact break-even units = fixed costs ÷ contribution margin per unit
When units cannot be divided, the operational figure is the exact volume rounded up. The example above needs 167 whole units. A service billed in hours can use the exact figure. The rounded number is not the same as the exact math, and revenue still follows the exact ratio.
How to calculate break-even revenue
Break-even revenue = fixed costs ÷ contribution margin ratio
That is also exact break-even units times selling price. Do not multiply the rounded whole-unit count by price if you want the mathematical break-even revenue. If fixed costs are $0.00 and contribution is positive, break-even units and revenue are $0.00 for the period.
How to calculate sales needed for a target profit
Add the target profit to fixed costs, then divide by contribution margin per unit or by the contribution margin ratio. With a $5,000.00 target on top of $10,000.00 of fixed costs and a $60.00 contribution, the result is 250 units and $25,000.00 of required revenue. The target is not a recommended profit for your industry.
How expected sales affect profit or loss
Expected revenue is expected unit volume times selling price. Expected total cost is fixed costs plus expected variable costs. Expected profit is expected revenue minus expected total cost, which is also expected contribution minus fixed costs. The labels Profit, Break-even and Loss describe that arithmetic. They do not describe cash in the bank.
What is margin of safety?
Margin of safety is expected volume minus exact break-even units, and expected revenue minus break-even revenue. The percentage is that revenue gap divided by expected revenue. If expected revenue is $0.00, the percentage is not available because the formula would divide by zero. A negative margin of safety means expected sales sit below break-even.
What costs should be included?
Include fixed costs that stay the same in the period you chose, such as rent, insurance or software. Include the variable cost that changes with each unit. Use the same period for fixed costs, target profit and expected volume. Do not mix monthly rent with an annual profit target in this version.
Limitations of this calculator
- Results are estimates based only on the numbers you enter.
- Only one standardized product or service is modeled.
- Sales mix is not included.
- Sales tax, VAT, income tax and payroll tax are not included.
- Percentage-based variable costs are not modeled separately.
- Quantity discounts, seasonality and capacity limits are not included.
- Financing, depreciation and inflation are not included.
- The result is not a cash-flow statement.
- Reaching break-even does not guarantee positive cash flow.
- The tool does not recommend a profit target.
Frequently asked questions
What is the break-even point?
The break-even point is the sales volume where revenue equals the costs included in the calculation. At that volume, profit is $0.00 based on those inputs. It is not a cash-flow result, and it does not mean every cost in the business has been included.
How do I calculate break-even units?
Divide fixed costs by contribution margin per unit. Contribution margin per unit is selling price per unit minus variable cost per unit. With $10,000.00 of fixed costs and a $60.00 contribution margin, the exact volume is 166.6667 units. If units cannot be divided, 167 whole units are needed.
How do I calculate break-even revenue?
Divide fixed costs by the contribution margin ratio. The ratio is contribution margin per unit divided by selling price per unit. With $10,000.00 of fixed costs and a 60% ratio, break-even revenue is $16,666.67. That matches exact break-even units times selling price.
What is contribution margin per unit?
Contribution margin per unit is selling price per unit minus variable cost per unit. It is the amount each unit leaves after the variable cost you included. That amount can cover fixed costs and, after break-even, become profit from the inputs shown.
What is the contribution margin ratio?
The contribution margin ratio is contribution margin per unit divided by selling price per unit. A $60.00 contribution on a $100.00 price is 60%. This calculator uses that ratio to find break-even revenue.
What happens if variable cost is higher than selling price?
Each unit loses money on the costs included here. Contribution margin is zero or negative, so there is no finite break-even. The tool shows that contribution and does not invent Infinity or a false unit count.
How do I calculate the sales needed for a target profit?
Add the target profit to fixed costs, then divide by contribution margin per unit for units or by the contribution margin ratio for revenue. With $10,000.00 of fixed costs, a $5,000.00 target profit and a $60.00 contribution, the result is 250 units and $25,000.00 of revenue.
What is margin of safety?
When you enter expected unit volume, margin of safety is how far that volume sits above or below break-even. It can be shown in units, revenue and as a percentage of expected revenue. A negative figure means expected sales are below break-even.
Should break-even units be rounded up?
Use the exact figure when units can be fractional, such as hours. Use the whole-unit figure, rounded up, when you cannot sell a partial unit. The calculator shows both and does not treat the rounded number as the exact math.
What costs should I include?
Include fixed costs that stay the same in the period you chose, and the variable cost that changes with each unit. Use the same period for fixed costs, target profit and expected volume. Taxes, percentage fees and mixed-product costs are not modeled automatically.
Does break-even mean the business has positive cash flow?
No. Break-even here means revenue covers the costs you typed. Cash can still be negative because of timing, inventory, debt payments, taxes or costs you left out.
Does this calculator include taxes?
No. It does not add sales tax, VAT, income tax or payroll tax. If a tax changes your unit economics, you need a different model or a dollar amount you have already calculated yourself.
Last reviewed August 23, 2026 (UTC).