How to use it
- Type the Fixed costs for the period, for example one month's rent and salaries.
- Type the Selling price per unit and the Variable cost per unit.
- Read the Units to sell to break even and the Revenue at break-even.
- Look at the chart: the point where the revenue line crosses the total cost line is the break-even point.
How the break-even point is calculated
Each unit sold brings in its price and uses its variable cost, so it leaves the price minus the variable cost to pay the fixed costs. That difference is the contribution margin per unit. The break-even point is reached when the contribution of all units sold equals the fixed costs.
The number of units is therefore the fixed costs divided by the contribution margin. Units are whole, so the result is rounded up, and the revenue is the price times that whole number.
Contribution margin per unit = price − variable cost
Break-even units = fixed costs ÷ contribution margin per unit
Break-even revenue = break-even units × price
Contribution margin ratio = contribution margin ÷ price- With fixed costs of 20,000, a price of 50 and a variable cost of 30, each unit contributes 20, so 20,000 ÷ 20 = 1,000 units break even.
- A price equal to or below the variable cost never breaks even, because each unit sold adds no contribution.
Reading the chart
The revenue line starts at zero and rises with the price. The total cost line starts at the fixed costs and rises with the variable cost. Left of the crossing the cost line is higher, which is a loss; right of it the revenue line is higher, which is a profit.
What this calculator does not include
- Changes in price or cost as volume changes, such as volume discounts or staircase pricing.
- Several products with different margins, and the mix of products you actually sell.
- Capacity limits, taxes and the cash you need before the first sale.
Worked example: fixed costs 20,000, price 50, variable cost 30
Each unit contributes 50 − 30 = 20 towards the fixed costs, which is a contribution margin ratio of 20 ÷ 50 = 40%.
The break-even point is 20,000 ÷ 20 = 1,000 units. The revenue is 1,000 × 50 = 50,000, and at that volume the total cost is 20,000 + 1,000 × 30 = 50,000.
| Figure | |
|---|---|
| Contribution margin per unit | 20.00 |
| Break-even units | 1,000 |
| Revenue at break-even | 50,000.00 |
Frequently asked questions
What are fixed costs and variable costs?
Fixed costs stay the same whatever you sell in the period, such as rent, salaries and insurance. Variable costs grow with each unit, such as materials, packaging and payment fees.
Why do I round the break-even units up?
You can only sell whole units. If the exact figure is 7.69, you need to sell 8 units to cover the fixed costs, so the revenue at break-even is the revenue of 8 units.
What if my price is lower than the variable cost?
Then each unit you sell loses money, and no volume breaks even. Raise the price, reduce the variable cost, or accept a loss on that product.
Does this include the profit I want to make?
No. The break-even point is where profit is zero. To find the units needed for a profit, add the profit you want to the fixed costs and divide by the contribution margin.
Are my figures sent to a server?
No. The calculation and the chart run in your browser, and nothing you enter is sent to us.
Sources
- Wikipedia: Break-even (break-even point equals fixed costs divided by contribution margin per unit)
- Wikipedia: Contribution margin (price minus variable cost per unit)
Figures and text last checked on Tuesday, November 10, 2026.