Break-even calculator

Formula

How it works

Each sale adds the price minus the variable cost (the contribution) towards fixed costs. Break-even is reached when contributions equal fixed costs; add a target profit to the fixed costs to find the units needed for it.

Worked example

The same calculation with the default values:

• Fixed costs for the period 12,000
• Selling price per unit 50
• Variable cost per unit 30
• Target profit (optional) 0

1. contribution per unit = 50 − 30 = 20
2. break-even units = 12,000 ÷ 20 = 600 → 600
3. break-even revenue = 600 × 50 = 30,000
4. units for target profit = (12,000 + 0) ÷ 20 = 600 → 600

Result: Contribution per unit: 20.00 USD · Contribution ratio: 40% · Break-even units: 600

Common mistakes

• Forgetting to include all fixed costs (rent, salaries, insurance, loan payments) - an incomplete fixed-cost figure understates how many units are really needed to break even.
• Using the selling price instead of price minus variable cost (the contribution margin) in the denominator - break-even volume is driven by the margin per unit, not the price alone.
• Treating the break-even point as a target rather than a minimum - it tells you where profit starts, not where it becomes healthy.