What is the break-even point?

The break-even point is where total revenue equals total fixed and variable costs, so operating profit is zero.

How do I calculate break-even sales?

Divide fixed costs by contribution margin per unit. For break-even revenue, divide fixed costs by the contribution margin ratio.

Why does variable cost matter?

A higher variable cost leaves less contribution from each sale to cover fixed costs, increasing the sales needed to break even.

Does break-even include cash timing?

No. Break-even measures profitability, not when customers pay or bills fall due. Use the cash flow calculator for timing and runway.

Profitability tool

Break-even calculator

Calculate the units and sales revenue your business needs to cover costs. Adjust price or variable cost to see how contribution margin changes your break-even target.

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Enter your monthly economics

Fixed costs

Rent, salaries and other costs that do not change with volume

Selling price per unit

Average revenue earned from one unit

Variable cost per unit

Direct cost incurred for each unit sold

Break-even units

417

Break-even revenue

$41,667

Contribution per unit

$60

Contribution margin

60.0%

Revenue vs total cost

Hover any point to compare revenue, total cost and profit at that sales volume. The dashed line marks your break-even units.

You need to sell approximately 417 units, generating $41,667 in revenue, to cover $25,000 in fixed costs.

How to use it

How the break-even calculator works

Break-even analysis separates fixed costs from costs that rise with each sale, then measures how much each unit contributes toward covering overhead.

Formula

Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit)

1Enter fixed costs for the same period you want to analyze.
2Use an average selling price and direct variable cost per unit.
3Compare the resulting target with realistic sales capacity, then test pricing or cost changes.

Worked example

A company with $25,000 in monthly fixed costs, a $100 selling price and $40 variable cost earns $60 contribution per unit. It must sell 417 units, or about $41,667 of revenue, to break even.

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Frequently asked questions

What is the break-even point?: The break-even point is where total revenue equals total fixed and variable costs, so operating profit is zero.
How do I calculate break-even sales?: Divide fixed costs by contribution margin per unit. For break-even revenue, divide fixed costs by the contribution margin ratio.
Why does variable cost matter?: A higher variable cost leaves less contribution from each sale to cover fixed costs, increasing the sales needed to break even.
Does break-even include cash timing?: No. Break-even measures profitability, not when customers pay or bills fall due. Use the cash flow calculator for timing and runway.

NanoFora provides AI-generated financial analysis for informational purposes and does not constitute regulated investment, tax or legal advice.