Break-Even Point Calculator
Enter fixed costs, price per unit, and variable cost per unit. See the exact sales volume where the business stops losing money.
| Break-even revenue | — |
| Contribution margin per unit | — |
| Margin of safety at expected sales | — |
| Profit at expected sales | — |
The break-even formula
Break-even units = Fixed costs ÷ (Price − Variable cost per unit)
The denominator is the contribution margin — what each sale contributes toward fixed costs. With $8,000 of fixed costs, a $50 price, and $18 variable cost, each unit contributes $32, so break-even is 250 units (~$12,500 revenue). Unit 251 onward is profit.
Reading the margin of safety
Expected sales of 320 against a 250 break-even = a 21.9% margin of safety: sales can fall 21.9% before losses begin. Under 15% is fragile — one bad month hurts; over 30% is comfortable. Investors and lenders read this number first.
Three levers, ranked by usual impact
- Raise price: flows 100% into contribution margin. A $5 increase here cuts break-even from 250 to 216 units — if demand holds.
- Cut variable cost: same math per dollar, usually harder to find.
- Cut fixed costs: reduces the hill directly — but cutting muscle (marketing, key staff) can shrink sales more than costs.
Frequently asked questions
How do I calculate break-even point?
Divide fixed costs by contribution margin (price minus variable cost per unit). $8,000 fixed ÷ ($50 − $18) = 250 units per month, or $12,500 of revenue.
What is contribution margin?
Price minus variable cost — the part of each sale that pays down fixed costs, then becomes profit after break-even. $32 on a $50 product is a 64% contribution margin.
What counts as fixed vs variable costs?
Fixed: costs unchanged by sales volume — rent, salaries, insurance, software. Variable: costs per sale — materials, payment fees, shipping. Semi-variable costs (utilities, hourly labor) get split by judgment.
What is a good margin of safety?
Expected sales at least 25–30% above break-even gives room for seasonality and surprises. Below 15%, small demand dips create losses — a signal to fix price or costs before scaling.
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Last updated: 2026-07-08