Break-Even Analysis Calculator

Find how many units you need to sell (or revenue you need to generate) to break even.

$
$

Cost of goods, direct labor, commissions, shipping

$

Rent, salaries, insurance, subscriptions — costs that don't change with volume

units

For margin of safety calculation

Break-Even Units

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Units/month to break even

Break-Even Revenue

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Monthly revenue needed

Contribution Margin

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Per unit sold

Margin of Safety

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Buffer above break-even

Profit at Different Sales Levels

Break-Even Formula

BEP (units) = Fixed Costs ÷ Contribution Margin Per Unit

BEP (revenue) = Fixed Costs ÷ Contribution Margin Ratio

Where: Contribution Margin = Selling Price – Variable Cost Per Unit

Fixed vs Variable Costs

Fixed Costs Variable Costs
Rent / leaseRaw materials
Salaries (salaried)Hourly labor
InsuranceSales commissions
Loan paymentsShipping / packaging
SubscriptionsCredit card fees

Related Data

Research cost of living and labor costs by metro at PlainCost. See salary benchmarks for hiring decisions at WageDex.

Disclaimer: Break-even analysis is a planning tool using simplified assumptions. Real business finances include taxes, financing costs, and costs that are semi-variable. Use this as a starting framework.

Frequently Asked Questions

What is break-even analysis?
Break-even analysis determines at what sales volume your total revenues equal total costs — meaning you're making neither profit nor loss. Above break-even, every additional unit sold contributes directly to profit. It's a critical planning tool for pricing decisions, funding requirements, and viability assessment.
What is contribution margin?
Contribution margin = Revenue per unit – Variable cost per unit. It represents how much each sale contributes toward covering fixed costs and then generating profit. A positive contribution margin means each sale helps pay fixed costs. Contribution margin ratio = contribution margin ÷ selling price.
How do I reduce my break-even point?
Three strategies: (1) Increase selling price (increases contribution margin). (2) Reduce variable costs (better suppliers, efficiency improvements). (3) Reduce fixed costs (negotiate rent, eliminate unnecessary overhead). A 10% price increase typically has more impact than a 10% cost reduction.
What is margin of safety?
Margin of safety = Actual sales – Break-even sales. It measures how much sales can fall before you start losing money. Expressed as a percentage: (Actual sales – BEP) / Actual sales. A 30%+ margin of safety is considered healthy; below 15% means you're vulnerable to any sales decline.

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