How to calculate your break-even point
- Enter your fixed costs per month: rent, salaries, insurance, software and loan repayments, which you pay whatever you sell.
- Enter the selling price per unit and the variable cost per unit: materials, packaging, shipping, payment fees and commissions that rise with every sale.
- The break-even number of units and revenue appear instantly, with a chart. Add a target profit to see how many units you need for it, and your expected sales to see your margin of safety.
Understanding break-even
Each sale contributes its price minus its variable cost towards your fixed costs. That is the contribution margin: selling at 50 with variable costs of 30 contributes 20. Divide fixed costs by the contribution margin and you get the break-even point: 4,000 ÷ 20 = 200 units a month. Below that you make a loss; every unit above it adds 20 of profit. To reach a profit goal, add it to the fixed costs before dividing.
Break-even analysis is a quick test of whether a business idea, product launch or price change is realistic. If you need to sell more units than your market or capacity allows, change the inputs: raise the price, cut variable costs or reduce fixed costs. The margin of safety shows how far sales could fall before you start losing money. Real costs are rarely perfectly fixed or variable, so treat the result as an estimate and revisit it as you learn your actual numbers. The calculation runs entirely in your browser, and the link keeps your figures so you can share them with a partner or adviser.
What is the break-even formula?
Break-even units = fixed costs ÷ (price − variable cost per unit). Break-even revenue = break-even units × price.
Are salaries fixed or variable costs?
Regular salaries are fixed. Hourly pay that rises with production, and sales commissions, are variable.
How can I lower my break-even point?
Increase prices, reduce variable costs per unit, or cut fixed overheads. Price rises usually have the biggest effect.