Break-Even Calculator
Calculate your break-even point in units and revenue, with contribution margin analysis and price sensitivity.
Break-even chart
Annual revenue vs costsSensitivity Analysis
| Price Change | Price | CM | Break-Even Units | Revenue |
|---|
Formula
- Fixed Costs
- Costs that don't change with production volume (rent, salaries, etc.)
- Variable Cost
- Cost that varies per unit (materials, shipping, etc.)
- Selling Price
- Revenue per unit sold
- Contribution Margin
- Amount each unit contributes toward covering fixed costs
Step-by-step with your numbers
- Enter your fixed costs, variable cost per unit, and selling price
- See how many units you need to sell to break even
- Review the sensitivity analysis for different price points
Examples
How It Works
The key concept is the contribution margin (CM) — the amount each unit sale contributes toward covering fixed costs. CM = Selling Price − Variable Cost. If you sell a product for $45 and it costs $15 to produce, each unit contributes $30 toward rent, salaries, and other fixed costs.
Break-even units = Fixed Costs ÷ Contribution Margin. With $5,000/month in fixed costs and a $30 CM, you need 167 units/month (or 2,000/year) to break even.
The CM Ratio (CM ÷ Price) tells you what percentage of each dollar of revenue goes toward fixed costs. A 66.7% CM ratio means $0.67 of every dollar covers overhead — higher ratios mean faster break-even.
The sensitivity analysis shows how break-even changes at different price points, helping you evaluate pricing strategy trade-offs.
Tips & Best Practices
Frequently Asked Questions
What are fixed vs variable costs?
Fixed costs stay the same regardless of production volume: rent, salaries, insurance, software subscriptions. Variable costs change with each unit produced: materials, shipping, packaging, sales commissions. Some costs are semi-variable (like utilities) — estimate and split them.
What is contribution margin ratio?
The CM ratio is the percentage of each sales dollar that goes toward covering fixed costs and profit. A 60% CM ratio on a $50 product means $30 covers fixed costs and $20 is variable cost. Higher ratios mean you break even faster.
What if my selling price is below variable cost?
If price < variable cost, you lose money on every unit sold and can never break even. You must either raise your price, reduce variable costs, or discontinue the product. The calculator will show 'Not possible' in this case.
How does break-even apply to services?
For services, variable cost per unit is the cost to deliver one unit of service (labor, materials). Fixed costs are overhead. A consulting firm might have $10,000/month fixed costs, $50/hour labor cost, and bill at $150/hour — break-even is 100 billable hours/month.