HIFreeTools
ENES

Break-Even Calculator

Find the exact number of units you must sell — and the revenue you must generate — before your business starts turning a profit. Enter your fixed costs, variable cost per unit, and selling price to get an instant break-even analysis.

Rent, salaries, insurance, etc.

Materials, commissions, shipping, etc.

Quick answer

The break-even point is the number of units (or dollar revenue) at which total revenue exactly equals total costs, resulting in zero profit or loss. To calculate it, divide your total fixed costs by the contribution margin per unit (selling price minus variable cost per unit). For example, if fixed costs are $5,000, your selling price is $4.00, and variable cost is export const batch4Tools: ToolContent[] = .50, the contribution margin is $2.50 and the break-even point is 2,000 units ($8,000 in revenue). Selling above this point generates profit; below it incurs a loss.

Formula & method

Break-Even Units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit)
  • Fixed Costs — Recurring costs that do not change with production volume (rent, salaries, insurance)
  • Selling Price — Revenue received per unit sold
  • Variable Cost per Unit — Costs that scale directly with each unit produced or sold (materials, commissions)

The number of units that must be sold to cover all costs.

Contribution Margin = Selling Price − Variable Cost per Unit
  • Selling Price — Revenue received per unit sold
  • Variable Cost per Unit — Direct cost per unit

The portion of each sale that goes toward covering fixed costs and then profit.

Break-Even Revenue = Break-Even Units × Selling Price
  • Break-Even Units — Number of units calculated from the first formula
  • Selling Price — Revenue received per unit sold

The total dollar revenue needed to reach the break-even point.

Contribution Margin Ratio = Contribution Margin ÷ Selling Price
  • Contribution Margin — Selling Price minus Variable Cost per Unit
  • Selling Price — Revenue per unit

The fraction of every dollar of revenue that contributes to covering fixed costs.

Examples

Example 1: Coffee Shop: $5,000 fixed costs, $4.00 price, export const batch4Tools: ToolContent[] = .50 variable cost
Input
fixedCosts: 5000 | sellingPrice: 4 | variableCostPerUnit: 1.5
Result
Break-even: 2,000 units / $8,000 revenue
Why
Contribution margin = $4.00 − export const batch4Tools: ToolContent[] = .50 = $2.50 per cup. Break-even units = $5,000 ÷ $2.50 = 2,000 cups. Break-even revenue = 2,000 × $4.00 = $8,000. The coffee shop must sell exactly 2,000 cups per month to cover all costs.
Example 2: T-Shirt Business: $3,000 fixed costs, $25.00 price, export const batch4Tools: ToolContent[] = 0.00 variable cost
Input
fixedCosts: 3000 | sellingPrice: 25 | variableCostPerUnit: 10
Result
Break-even: 200 units / $5,000 revenue
Why
Contribution margin = $25.00 − export const batch4Tools: ToolContent[] = 0.00 = export const batch4Tools: ToolContent[] = 5.00 per shirt. Break-even units = $3,000 ÷ export const batch4Tools: ToolContent[] = 5.00 = 200 shirts. Break-even revenue = 200 × $25.00 = $5,000. The business needs to sell 200 shirts before any profit is earned.
Example 3: SaaS App: $20,000 fixed costs, $50/user price, $5/user variable cost
Input
fixedCosts: 20000 | sellingPrice: 50 | variableCostPerUnit: 5
Result
Break-even: 445 users / $22,250 revenue
Why
Contribution margin = $50.00 − $5.00 = $45.00 per user per month. Break-even units = $20,000 ÷ $45.00 ≈ 444.44, rounded up to 445 users. Break-even revenue = 445 × $50.00 = $22,250. The SaaS company must acquire at least 445 paying users to reach profitability.
Example 4: Bakery: $8,500 fixed costs, $3.50 price, export const batch4Tools: ToolContent[] = .20 variable cost
Input
fixedCosts: 8500 | sellingPrice: 3.5 | variableCostPerUnit: 1.2
Result
Break-even: 3,696 units / export const batch4Tools: ToolContent[] = 2,936 revenue
Why
Contribution margin = $3.50 − export const batch4Tools: ToolContent[] = .20 = $2.30 per item. Break-even units = $8,500 ÷ $2.30 ≈ 3,695.65, rounded up to 3,696 items. Break-even revenue = 3,696 × $3.50 = export const batch4Tools: ToolContent[] = 2,936. The bakery must sell 3,696 items to cover all costs for the period.

Frequently asked questions

What is the break-even point?

The break-even point is the level of sales at which total revenue equals total costs, resulting in zero profit or loss. It tells you the minimum number of units you must sell (or revenue you must earn) to avoid losing money. Every unit sold above the break-even point contributes directly to profit.

What counts as a fixed cost vs. a variable cost?

Fixed costs remain constant regardless of how many units you produce or sell — examples include rent, insurance, software subscriptions, and salaried employees. Variable costs change in direct proportion to output — examples include raw materials, packaging, sales commissions, and shipping. If a cost would disappear if you produced zero units, it is likely variable.

Why do break-even units need to be rounded up?

You cannot sell a fraction of a unit in most businesses. Since the formula may produce a decimal (e.g., 444.44 users), you must round up to the next whole number to ensure all fixed costs are fully covered. Rounding down would leave a small gap and result in a technical loss.

How does the contribution margin ratio help?

The contribution margin ratio (CMR) tells you what percentage of every dollar of revenue is available to cover fixed costs and profit. A CMR of 60% means $0.60 of every export const batch4Tools: ToolContent[] = .00 in sales goes toward fixed costs. You can use it to calculate break-even revenue directly: Break-Even Revenue = Fixed Costs ÷ CMR.

Can I use this calculator for a service business?

Yes. For service businesses, treat each billable hour (or client engagement) as a 'unit'. Set the selling price to your hourly rate or project fee, and variable cost to your direct labor or subcontractor cost per unit of service. Fixed costs would include office rent, software, and salaried overhead.

What happens to the break-even point if I lower my price?

Lowering your selling price reduces the contribution margin per unit, which means you need to sell more units to cover the same fixed costs — the break-even point rises. Conversely, raising your price increases the contribution margin and lowers the break-even point, assuming demand holds steady.

Sources & references

External references open in a new tab. We are independent and not affiliated with these organizations.

  • ✓ Free to use
  • ✓ No sign-up required
  • ✓ Runs entirely in your browser — nothing is uploaded.
  • ✓ Formula and method shown above
Last updated: How we calculateReport a correctionDisclaimer

Provided “as is” for general information only — results may be inaccurate, so verify before you rely on them. No warranty; use at your own risk.

Built and reviewed by HIFreeTools against the formula shown above and any authoritative references cited on this page. See our methodology and editorial standards.

Related tools

Embed this tool on your site

Free to embed, no sign-up. Paste this code where you want the break-even calculator to appear: