Break-Even Analysis Calculator
Determine how many units you need to sell to cover all your costs. Enter your fixed costs, selling price, and variable costs to find your break-even point, contribution margin, and expected profit.
Break-even analysis is a fundamental business tool that tells you the minimum sales volume needed to cover all costs. At the break-even point, total revenue equals total costs, meaning the business earns zero profit but also incurs no loss.
The break-even formula is: Break-Even Units = Fixed Costs / (Selling Price - Variable Cost per Unit). The denominator is called the contribution margin, which represents how much each unit sold contributes toward covering fixed costs and generating profit.
Understanding your break-even point is crucial for pricing decisions, setting sales targets, evaluating new products, and securing funding. If your break-even point is too high relative to market demand, you may need to reduce costs, raise prices, or reconsider the viability of the product. Every unit sold beyond the break-even point generates profit equal to the contribution margin.