Free break-even calculator: find break-even units, revenue, contribution margin, target profit sales, and margin of safety, with formulas and a worked example.
Use this break-even calculator to estimate how many units you need to sell before total revenue covers total cost. It also shows break-even revenue, contribution margin, contribution margin ratio, target profit sales, and margin of safety so you can use it for pricing, budgeting, and basic unit-economics planning.
The main formula is Break-even units = Fixed cost / (Price - Variable cost). The calculator also turns that unit result into break-even revenue.
This is useful when you want to test whether your current price can support your fixed-cost base, how much operating cushion you have at expected sales, or how many units you would need to sell to reach a profit target. In practical terms, the contribution margin is the amount each unit contributes toward fixed costs and then profit.
How to Calculate Break-Even Point: Step-by-Step Example
Using the calculator’s default numbers — a fixed cost of $12,000, a variable cost of $18 per unit, and a price of $35 per unit:
- Contribution margin per unit = $35 − $18 = $17.
- Break-even units = $12,000 ÷ $17 ≈ 706 units (rounded up to a whole unit).
- Break-even revenue = 706 × $35 ≈ $24,706, which also equals $12,000 ÷ a 48.6% contribution margin ratio.
- Units for a $5,000 target profit = ($12,000 + $5,000) ÷ $17 = 1,000 units, generating $35,000 in revenue.
- Margin of safety at 800 expected units = 800 − 706 = 94 units, about 11.8% — expected sales could drop by roughly that much before the business falls back into a loss.
Break-Even Point in Units vs. Break-Even Point in Revenue
Break-even units tells you how many individual items, bookings, or subscriptions you need to sell. Break-even revenue (sometimes called the break-even point in dollars) converts that into a sales-dollar target using the contribution margin ratio instead of a per-unit contribution margin. Use units when you track sales by quantity (products, seats, tickets); use revenue when a business sells many different items at different prices and a single unit count would not be meaningful.
Break-Even Formulas at a Glance
| Metric | Formula |
|---|
| Break-even units | Fixed cost ÷ (Price − Variable cost) |
| Break-even revenue | Fixed cost ÷ Contribution margin ratio |
| Contribution margin (per unit) | Price − Variable cost |
| Contribution margin ratio | Contribution margin ÷ Price |
| Units for target profit | (Fixed cost + Target profit) ÷ Contribution margin |
| Margin of safety (units) | Expected sales − Break-even units |
| Margin of safety (%) | Margin of safety (units) ÷ Expected sales |
How to Lower Your Break-Even Point
A lower break-even point means less sales risk before a business turns profitable. The main levers are:
- Cut fixed costs — rent, salaries, software, and other costs that don’t change with sales volume.
- Lower variable cost per unit — better supplier pricing, less waste, or more efficient production.
- Raise price per unit if the market supports it, which directly increases the contribution margin. Use the markup calculator to work out a new price from a target margin.
- Shift the sales mix toward higher-margin products or services, which raises the blended contribution margin ratio.
Any of these reduces the denominator or increases it relative to fixed cost in the break-even formula, which lowers the number of units or the amount of revenue needed to break even.
Result
Unit economics |
|---|
Contribution Margin (CMi) | 0.00 |
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Contribution Margin Ratio (CMR) | 0.00 |
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Expected Sales (№ of Units) |
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Revenue at Expected Volume (R) | 0.00 |
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| Profit | 0.00 |
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Margin of Safety (Units) (MOSu) | 0.00 |
|---|
Margin of Safety (%) (MOS %) | 0.00 |
|---|
Target Profit |
|---|
Units for Target Profit (QTP) | 0.00 |
|---|
Revenue for Target Profit (RTP) | 0.00 |
|---|
Break-Even Calculator FAQ
What is break-even point?
The break-even point is the sales level where total revenue equals total cost, so profit is zero. Below that point the business is losing money, and above that point each additional unit contributes to profit.
How do you calculate break-even units?
Break-even units are calculated as Fixed Costs / (Price per Unit - Variable Cost per Unit). The denominator is the contribution margin per unit.
What is break-even revenue?
Break-even revenue is the amount of sales needed to cover all fixed and variable costs. It can be calculated by multiplying break-even units by price per unit, or by dividing fixed costs by the contribution margin ratio.
What is contribution margin and contribution margin ratio?
Contribution margin per unit is price - variable cost. Contribution margin ratio is the contribution margin divided by price. These metrics show how much of each sale is available to cover fixed costs and then generate profit.
What is margin of safety?
Margin of safety shows how far current or expected sales are above the break-even point. A larger margin of safety usually means the business has more room before sales fall into loss territory.
How does target profit affect break-even analysis?
If you want to earn a specific profit instead of just breaking even, you add the target profit to fixed costs and divide by contribution margin per unit. That gives the units required for target profit.
Why would break-even be impossible or undefined?
If price per unit is less than or equal to variable cost per unit, the contribution margin is zero or negative. In that case the business cannot cover fixed costs through unit sales, so a valid break-even point does not exist.
What is this break-even calculator best for?
It is best for quick planning around pricing, sales targets, unit economics, basic cost-volume-profit analysis, and early-stage business modeling. It is especially useful when you want a fast view of operating cushion without building a full forecast model.
What is the difference between break-even point in units and break-even point in revenue?
Break-even units is a quantity — the number of items you need to sell. Break-even revenue is a dollar figure, calculated by dividing fixed cost by the contribution margin ratio. Both describe the same break-even point; use whichever unit makes sense for how the business tracks sales.
How can I lower my break-even point?
Cut fixed costs, lower the variable cost per unit, raise the price per unit, or shift sales toward higher-margin products. Any change that increases the contribution margin relative to fixed cost lowers the number of units or the amount of revenue needed to break even.
What is a good break-even point?
There is no universal number — a good break-even point is one your expected sales can clear with a comfortable margin of safety. A lower break-even point relative to expected sales generally means less risk if sales come in below forecast.
How long does it take to reach break-even?
That depends on sales volume, not just the break-even calculation itself. Divide break-even units by your expected sales rate per period (for example, per month) to estimate how many periods it takes to reach the break-even point.
