Break-Even Calculator Guide: How to Find Your Break-Even Point

What it does

The break-even calculator tells how many units you must sell before revenue covers fixed and variable costs. It now also shows break-even revenue, contribution margin ($ and %), units/revenue to hit a profit target, safety margin vs your current sales, and rough time-to-break-even when you enter expected monthly units.

How to use it

Enter the core three numbers, then add optional fields for more insight.

• Fixed Costs (rent, salaries, etc.)
• Variable Cost per Unit (materials, fees)
• Price per Unit
• Target Profit (optional) - see how many units/revenue you need to hit that goal.
• Current Sales (units, optional) - shows safety margin vs break-even.
• Expected Monthly Units (optional) - shows approximate months to break-even.

When to use it

Use it to test pricing, cost cuts, or new product ideas before committing. Helpful when deciding if planned volume can cover startup spend or when setting minimum viable sales for a launch.

Interpreting results

• If price is near or below variable cost, raise price or reduce variable cost - break-even is impossible otherwise.
• Contribution margin ($ and %) tells you how much each unit contributes to covering fixed costs and profit.
• Target profit output gives you a clear "sell at least X units" goal.
• Safety margin shows how far above/below break-even you are at current sales.
• Months-to-break-even helps sanity-check your monthly volume assumptions.

Example

• Fixed costs: $10,000/month
• Variable cost: $20/unit
• Price: $50/unit - Contribution margin: $30 (60%)
• Break-even: 334 units (about $16,700 revenue)
• Profit target $5,000: 500 units (about $25,000 revenue)
• Current sales 400 units - Safety margin ~17% above break-even
• Expected monthly units 150 - ~3 months to break-even

Pitfalls

• Using overly optimistic monthly units - time-to-break-even will be wrong.
• Ignoring variable costs (discounts, payment fees, shipping) when pricing.
• Counting sunk costs�stick to relevant fixed costs for the time period.

Related Guides

Continue learning with ROI vs Annualized ROI and dive into loan affordability in Mortgage Payment Breakdown. You can also explore every tool on the calculator dashboard.