๐ Break-Even Point Calculator
Enter your fixed costs, price per unit, and variable cost per unit to calculate the contribution margin per unit, break-even sales volume, and break-even revenue. Useful for pricing decisions, business planning, and understanding a new product's break-even line.
How to use
- Enter your fixed costs (rent, salaries, and other costs that don't depend on sales volume).
- Enter the price per unit and the variable cost per unit (e.g. per-unit cost of goods).
- The contribution margin, break-even sales volume, and break-even revenue are calculated automatically.
How the calculation works
The break-even point is the sales volume (or revenue) at which revenue exactly covers costs and profit is zero. Sell more and you make a profit; sell less and you make a loss. Costs are split into fixed costs, which do not change with volume (rent, salaries), and variable costs, incurred for each unit sold (materials, stock). The selling price minus the variable cost is the contribution margin: what each unit sold contributes towards covering fixed costs. Break-even volume is fixed costs รท contribution margin per unit. Since you can only sell whole units, it is rounded up. Break-even revenue is that volume multiplied by the price. If the contribution margin is zero or negative (variable cost at or above the price), fixed costs can never be recovered, so there is no break-even point.
Worked example
Fixed costs ยฅ500,000, price ยฅ1,500, variable cost ยฅ900 1. Contribution margin: 1,500 โ 900 = ยฅ600 2. Break-even volume: 500,000 รท 600 โ 833.3 โ 834 units 3. Break-even revenue: 834 ร 1,500 = ยฅ1,251,000 Only at 834 units does profit reach zero or above. Raising the price to ยฅ1,600 lifts the margin to ยฅ700 and brings break-even down to 715 units.
Things to be aware of
- In practice, variable cost per unit can change with volume (bulk discounts) and fixed costs can step up as you grow.
- Profit above break-even is still subject to tax.
- With several products, you need to account for the sales mix between them.
- A warning is shown if the contribution margin is zero or negative.
FAQ
What is the contribution margin?
The contribution margin per unit is the price per unit minus the variable cost per unit โ the amount each unit sold contributes toward covering fixed costs.
What happens if the variable cost is higher than the price?
If the contribution margin is zero or negative, each unit sold loses money or breaks even at best, so the break-even point can never be reached at that pricing. A warning is shown in this case instead of a result.
How is the break-even sales volume rounded?
The break-even unit count is rounded up (ceiling) to the nearest whole unit, since you can't sell a fraction of a unit and still cover all fixed costs.
Is this useful for pricing a new product?
Yes โ try different price points and see how the break-even sales volume shifts, which helps you weigh a realistic sales target against your pricing.
What should I include in fixed costs?
Include costs that stay constant regardless of sales volume, like rent, salaries, or lease payments. Costs that scale with volume, like raw materials, belong in the variable cost per unit instead.