Break-Even Point Calculator
The break-even point is the sales volume at which a business stops losing money: revenue exactly covers all costs, fixed and variable. This calculator finds it in units and revenue, shows your contribution margin, and optionally the sales needed to hit a target profit.
It is the first calculation behind almost every pricing and launch decision: a new product, a market stall, a SaaS plan, an online store, or a studio lease. If the break-even volume looks unreachable, change the price, the costs, or the plan before reality does it for you.
The break-even formulas
Contribution margin = Price per unit − Variable cost per unit
Break-even units = Fixed costs ÷ Contribution margin
Break-even revenue = Break-even units × Price
Each sale contributes its margin toward fixed costs. Break-even is how many contributions it takes to cover them. With a target profit: units = (Fixed costs + Target profit) ÷ Contribution margin. If the contribution margin is zero or negative (price at or below variable cost), no volume can ever break even, and the calculator says so.
Worked example
A candle business with $5,000/month of fixed costs sells candles at $40 with $15 of variable cost each:
| Contribution margin | $40 − $15 = $25 per candle (62.5%) |
|---|---|
| Break-even point | $5,000 ÷ $25 = 200 candles/month |
| Break-even revenue | $8,000/month |
| For $2,000 profit | ($5,000 + $2,000) ÷ $25 = 280 candles |
Two hundred candles is about 7 sales a day. Raising the price to $45 drops break-even to 167. Finding $3 cheaper materials drops it to 179. Testing the levers before spending money is the whole point of break-even analysis.
Using break-even analysis well
Classify costs honestly. Fixed costs stay put when sales change: rent, salaries, subscriptions, insurance. Variable costs scale with each sale: materials, packaging, shipping, payment fees, marketplace commissions. Split semi-variable costs. The model assumes one price and one product, so multi-product businesses usually run it per product line or use a blended average margin.
The most useful follow-up number is your margin of safety: how far current sales sit above break-even, as a percentage. Selling 260 candles against a 200-candle break-even is a 23% cushion. Thin cushions argue for cutting fixed costs or raising margin. The freelance rate calculator applies the same cost-recovery logic to service businesses.
Frequently asked questions
What is the break-even point formula?
Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit). The bracketed term is the contribution margin, what each sale contributes toward fixed costs. Multiply the units by price for break-even revenue.
What's the difference between fixed and variable costs?
Fixed costs do not change with sales volume in the short term: rent, salaries, insurance, software. Variable costs occur per unit sold: materials, shipping, transaction fees. Only variable costs scale with each sale. Everything else must be covered by accumulated margin.
Can I use this for a service business?
Yes. Treat a billable hour, a project or a monthly client as the "unit." A consultant with $3,000 of monthly fixed costs charging $150/hour with negligible variable cost breaks even at 20 billable hours a month.
What is a good contribution margin?
It varies by industry. Software and digital products often exceed 80%, handmade goods 50–70%, retail and food 20–40%. What matters is whether the margin, times realistic volume, comfortably clears your fixed costs.
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This calculator is for general information and education only. It is not professional advice. Confirm important decisions with a qualified adviser.