Break-even Calculator

Q: How do I calculate a break-even point?

Fixed costs ÷ (price − variable cost). With 5,000 fixed and 10 contribution per unit: 500 units.

Q: What if the price is lower than the variable cost?

Every sale loses money and you can never break even.

Q: What is a margin of safety?

(Actual sales − break-even sales) ÷ actual sales.

Find out how many units you need to sell, and how much revenue you need, before your business stops losing money. Add a target profit to see the sales you need to reach it.

Units & revenueContribution marginTarget profitLast updated: November 3, 2026

Calculate break-even point

Fixed costs

Rent, salaries, insurance, software… for the period

Selling price per unit

Variable cost per unit

Materials, packaging, payment fees, shipping per sale

Target profit (optional)

Currency

Break-even formula

Contribution margin

Contribution per unit = price − variable cost

Each sale “contributes” this amount towards paying off fixed costs and then making profit.

Break-even units

Units = (fixed costs + target profit) ÷ contribution per unit

Break-even revenue

Revenue = units × price = fixed costs ÷ contribution margin ratio

Contribution margin ratio = contribution ÷ price.

Worked example

Fixed costs 5,000 a month; price 25; variable cost 15

Contribution = 25 − 15 = 10 per unit (40% ratio)
Break-even = 5,000 ÷ 10 = 500 units = 12,500 revenue
For a 2,000 profit: (5,000 + 2,000) ÷ 10 = 700 units (17,500 revenue)

Fixed vs variable costs

Fixed costs (don’t change with sales)	Variable costs (rise with each sale)
Rent and business rates	Raw materials and stock
Salaries of permanent staff	Packaging and shipping
Insurance, software subscriptions	Card and marketplace fees
Loan repayments, depreciation	Sales commission

How to lower your break-even point

Raise prices — even a small increase lifts the contribution per unit a lot.
Cut variable costs by negotiating with suppliers or reducing shipping costs.
Trim fixed costs such as unused subscriptions or office space.
Sell higher-margin products alongside your main line.

Frequently asked questions

How do I calculate a break-even point?

Divide fixed costs by the contribution per unit (price minus variable cost). With 5,000 fixed costs and 10 contribution per unit, you break even at 500 units.

What if the price is lower than the variable cost?

Then every sale loses money and you can never break even. Raise the price or reduce variable costs first.

What is a margin of safety?

How far actual sales can fall before you hit break-even: (actual sales − break-even sales) ÷ actual sales.

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Results are for planning. Real costs are rarely perfectly fixed or variable; review your figures regularly.