Break-Even Calculator
Find out how many units you need to sell to cover costs
Last updated: January 2025
About This Tool
Understanding your break-even point is crucial for business planning and pricing decisions. This calculator helps you determine exactly how many units you need to sell to cover all your costs and start making profit.
What is Break-Even Calculator?
The break-even point is where total revenue equals total costs, meaning you have neither profit nor loss. Below this point, you are operating at a loss; above it, you are making profit. It is expressed as either a number of units or a dollar amount of sales.
How It Works
Break-even analysis considers fixed costs (expenses that stay the same regardless of sales volume, like rent) and variable costs (expenses that change with each unit sold, like materials). The formula divides fixed costs by the contribution margin (selling price minus variable cost per unit) to find the break-even quantity.
Formula
Break-Even Units = Fixed Costs / (Price per Unit - Variable Cost per Unit)
Rent, salaries, insurance, etc.
Materials, labor per item
Calculate units needed for profit goal
Break-Even Point
334 units
$16,700 in revenue
For $5,000 Profit
500 units
$25,000 in revenue
Break-Even Analysis Chart
Key Metrics
Formula
Break-Even Units =
Fixed Costs
―――――――――
Price - Variable Cost
💡 Pro Tips
- • Lower fixed costs = lower break-even point
- • Higher margin = fewer units needed
- • Review break-even monthly
Related Tools
When to Use This Calculator
- 1When launching a new product or service
- 2Setting prices to ensure profitability
- 3Evaluating whether a business idea is financially viable
- 4Determining sales targets for budgeting
- 5Making decisions about expanding or scaling operations
Pro Tips
- •Review your break-even point regularly as costs change
- •Lower your break-even by reducing fixed costs or increasing margins
- •Consider multiple scenarios (best case, worst case, likely case)
- •Factor in all costs, including often-forgotten overhead
- •Use break-even to set minimum sales targets for your team
Common Mistakes to Avoid
- •Underestimating fixed costs by forgetting some expenses
- •Not accounting for all variable costs per unit
- •Assuming costs remain constant as volume increases
- •Setting prices too low without understanding break-even
- •Not updating calculations when costs or prices change