Break-Even Point Calculator
The break-even point is the sales volume where total revenue equals total costs. Below it you lose money on every period; above it each additional sale contributes profit.
- Break-even units
- 1,000
- Break-even revenue
- $100,000.00
- Contribution margin per unit
- $60.00
- Contribution margin ratio
- 60.0%
How it works
Break-Even Units = Fixed Costs / (Price per Unit - Variable Cost per Unit)
Enter fixed costs for the period (rent, salaries, software, insurance), the selling price per unit, and the variable cost per unit (materials, direct labor, transaction fees).
Price minus variable cost is the contribution margin per unit: what each sale contributes toward covering fixed costs. Fixed costs divided by that margin is the number of units needed to break even. The calculator also reports the contribution margin ratio (CM ratio), the margin as a percentage of price.
Worked example
With $60,000 of annual fixed costs, a $100 price, and $40 of variable cost per unit, the contribution margin is $60 per unit and the CM ratio is 60%. Break-even = 60,000 / 60 = 1,000 units, or $100,000 of revenue.
Frequently asked questions
- What is the contribution margin ratio (CM ratio)?
- Contribution margin divided by price, expressed as a percentage. A 60% CM ratio means 60 cents of every revenue dollar is available to cover fixed costs and then profit.
- What counts as a fixed cost vs a variable cost?
- Fixed costs stay the same regardless of volume (rent, salaried staff, subscriptions). Variable costs scale with each unit sold (materials, hourly labor, payment processing).
- How do I break even faster?
- Raise price, cut variable cost per unit, or reduce fixed costs. Small price increases usually move the break-even point more than equivalent cost cuts.
- Does this work for services?
- Yes. Treat a billable hour or a client engagement as the unit, with delivery labor as the variable cost.
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