Break-Even Analysis Calculator
Calculate break-even units and revenue for a business using fixed costs, price per unit, and variable cost per unit. Standard managerial accounting formula.
Rent, salaries, insurance, subscriptions. Costs that stay the same whether you sell zero or many units.
Raw materials, direct labor, packaging, payment processing. Costs that scale with volume.
Set this to see projected profit and margin of safety at a specific volume.
About this tool
Break-even analysis answers the question every operator asks at the start of each month: how many units do I have to sell before I stop losing money? It does this by dividing fixed costs (the expenses that happen whether you sell zero or ten thousand units) by contribution margin per unit (the part of each sale that goes toward covering fixed costs and eventually profit). The result is the break-even quantity. Everything sold beyond that is profit.
This calculator takes monthly fixed costs, price per unit, and variable cost per unit. It outputs contribution per unit, contribution margin percentage, break-even units per month, and break-even revenue per month. An optional actual-units input shows projected profit and margin of safety (units above break-even). The margin of safety is a useful sanity number: at 334 break-even and 400 actual units sold, you can lose 66 units of volume before you start losing money.
Break-even analysis is most useful for single-product or nearly-single-product businesses where unit economics are consistent. For multi-product businesses, use a weighted-average contribution margin, or run the calculator once per product and assign fixed costs by a reasonable allocation. See the project profitability calculator for a project-level sibling that factors in overhead allocation.
How it works
Contribution per unit = price - variable_cost. This is what each sale contributes toward covering fixed costs after the variable costs of producing that unit are deducted. Contribution margin percentage = contribution / price × 100.
Break-even units = ceil(fixed_costs / contribution_per_unit). The formula is straightforward: fixed costs stay fixed, and each unit sold chips away at them by the contribution amount. When cumulative contribution equals fixed costs, the business breaks even on that period. The tool rounds up because you cannot sell a partial unit.
Break-even revenue = break_even_units × price. This is often more useful for communicating to stakeholders because "we need $16,700 of revenue to break even" lands differently than "we need 334 units." Both say the same thing.
Margin of safety = actual_units - break_even_units, the number of unit sales the business can lose before hitting the break-even line. A 20%+ margin of safety (actual is 1.20× break-even) is considered healthy in most industries; a margin of safety under 10% means the business is vulnerable to minor volume swings.
Examples
$10,000 of monthly fixed costs with $30 of contribution per unit. Break-even at 334 units / $16,700 revenue. At 400 actual units, the business clears break-even by 66 units and earns $2,000 of monthly profit.
Higher-fixed-cost business missing break-even by 34 units. Monthly loss of $2,000 at 800 units. Options: sell more, cut fixed costs, or raise price. Raising variable cost with better materials is another lever but usually moves the wrong direction for break-even.
High-margin service business: 75% contribution margin means 34 units covers the $5,000 overhead. Every unit above that is $150 of profit. Service businesses typically have higher contribution margins than product businesses, which means smaller break-even points but more fixed-cost sensitivity.
When to use
Use this when pricing a new product (need to know break-even before committing to a launch budget), at the start of each month to set a sales target that clears overhead, or when evaluating a fixed-cost decision like hiring or signing a lease. For multi-product businesses, run the calculator with weighted-average per-unit economics, or do it once per product and allocate fixed costs proportionally. Pair with the profit margin calculator to see the post-break-even earnings side.
Related concepts
Frequently asked questions
How do I handle mixed fixed/variable costs?
Costs like utilities often have a fixed minimum plus a variable per-unit component. Split them at the monthly average use. Any cost that stays roughly constant regardless of volume is fixed; anything that scales with volume is variable. When in doubt, ask whether the cost would drop to zero if you sold zero units this month. If yes, it is variable. If no, it is fixed.
What contribution margin is typical?
Varies widely by industry. Retail and restaurants often run 40-60% contribution margin with high fixed costs (rent, payroll). SaaS and software often run 70-90% because marginal cost per customer is near zero. Manufacturing often runs 20-40% because materials dominate. What matters is whether your specific margin covers your specific fixed costs at realistic volume.
Is this for a single month or a year?
Run the calculation for whichever period your fixed costs are expressed in. Monthly fixed cost = monthly break-even. Annual fixed cost = annual break-even. Mixing the two (annual fixed, monthly price) gives a nonsensical result.
Sources
- SBA Small Business Administration, Calculate your startup costs
(primary, accessed Apr 16, 2026)
Federal agency reference for fixed vs variable cost planning; the tool's math follows standard contribution-margin accounting.
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