Break-Even Calculator

Find how many units you must sell before you start making a profit, given fixed and per-unit costs.

How the Break-Even Calculator works

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Example calculation

The same formula scales from a coffee cart to a subscription box - only the inputs change, and the contribution margin always drives the answer. Below are three fully worked cases.

Example 1 - Coffee cart. Monthly fixed costs (pitch fee, insurance, phone) = $2,400. Price per cup = $4.50. Variable cost (beans, cup, milk) = $1.50. Contribution margin = $4.50 - $1.50 = $3.00. Break-even units = $2,400 / $3.00 = 800 cups. Break-even revenue = 800 x $4.50 = $3,600. That is 800 cups / about 30 days = roughly 27 cups a day just to reach zero.

Example 2 - Consulting service. Fixed costs = $9,000/month. Price per engagement = $150. Variable cost (subcontractor, software seat) = $30. Margin = $120. Break-even units = $9,000 / $120 = 75 engagements. Break-even revenue = 75 x $150 = $11,250. A high margin (80% of price) means relatively few sales clear the bar.

Example 3 - Subscription box. Fixed costs = $18,000/month. Price = $39. Variable cost (product, box, shipping) = $22. Margin = $17. Break-even units = $18,000 / $17 = 1,058.8, rounded up to 1,059 boxes. Break-even revenue = 1,059 x $39 = $41,301. The thin $17 margin (43.6% of price) forces far higher volume.

Scenario	Fixed costs	Price	Variable cost	Margin	Margin ratio	Break-even units	Break-even revenue
Coffee cart	$2,400	$4.50	$1.50	$3.00	66.7%	800	$3,600
Consulting	$9,000	$150.00	$30.00	$120.00	80.0%	75	$11,250
Subscription box	$18,000	$39.00	$22.00	$17.00	43.6%	1,059	$41,301

Notice the pattern: the consulting business has the second-highest fixed costs yet the lowest break-even volume, because its contribution margin is the fattest. Volume needed is driven by margin, not by price or fixed costs alone.

Tips for using the Break-Even Calculator

• Track contribution margin per unit, not gross profit, when you set the break-even target - margin (price minus variable cost) is the only number the formula divides into fixed costs, so it is the lever that moves break-even the most.
• Raising price lifts the margin and lowers break-even units; cutting variable cost raises the margin without touching price - run both in the tool to see which clears the bar with fewer sales.
• Never price below variable cost hoping volume will save you - the margin goes negative, every sale deepens the loss, and no quantity can ever reach break-even.
• Split startup costs from recurring fixed costs: recurring break-even tells you the monthly volume to survive, while total break-even (including one-time spend) tells you when the venture has paid itself back.
• Compute a margin of safety: (actual sales - break-even sales) / actual sales. If you sell 900 units against an 800 break-even, your safety margin is only 11% - one slow month wipes out profit.
• Put payment-processing fees (about 2.9% + $0.30 on cards) into variable cost, not fixed - they scale with each sale and quietly shrink your contribution margin.
• For a target profit, add the profit goal to fixed costs before dividing: (fixed + target) / margin. A $1,200 profit on the coffee cart needs ($2,400 + $1,200) / $3 = 1,200 cups.
• Stress-test with a higher variable cost (a supplier price hike) before you commit - a $1 rise in variable cost on a $17-margin box pushes monthly break-even from 1,059 up to 1,125 boxes, about 66 more units.
• If you sell several products, use a weighted average contribution margin based on your real sales mix - a single blended margin from your highest-volume item alone understates break-even.
• Re-run break-even whenever rent, wages, or material costs change - fixed-cost creep raises the volume bar slowly and is the quiet killer of thin-margin businesses.

Break-even vs profit margin vs markup vs ROI - what each answers

Break-even answers "how many must I sell to stop losing money," while margin, markup, and ROI describe a single unit or a single investment. They share inputs but answer different questions, so do not swap them.

Tool	Question it answers	Core inputs	Output
Break-even (this tool)	What sales volume covers all costs?	Fixed costs, price, variable cost	Units and revenue
Profit margin	What share of one sale is profit?	Price, cost	A percentage
Markup	How much above cost do I price one unit?	Cost, markup %	A price
ROI	What return did an investment earn?	Gain, cost of investment	A percentage

The practical workflow: use the markup calculator or profit margin calculator to set the price of one unit, then bring that price here to find the volume that makes the business viable. Margin and markup stop at the unit; break-even is the only one that tells you whether the unit economics actually add up to a surviving business. Use the ROI calculator only after you have cleared break-even, to judge whether the return on the money you put in is worth it.

Common mistakes that wreck a break-even estimate

Most bad break-even numbers come from miscategorizing a cost, not from the formula. Because the whole answer hinges on the contribution margin, a single misplaced cost reshapes every result. Watch for these errors:

• Putting variable costs in the fixed bucket (or the reverse). Card fees, shipping, and materials scale per sale and belong in variable cost; rent and salaries do not. Misplacing them changes the margin and throws off units and revenue alike.
• Forgetting your own salary. If you do not pay yourself, break-even looks artificially low. Add a market-rate wage to fixed costs so the number reflects a real, survivable business.
• Using revenue instead of contribution margin to cover fixed costs. Only the margin - not the full price - pays down fixed costs, because each sale also incurs its own variable cost. Dividing fixed costs by price understates the volume you need.
• Ignoring rounding direction. Break-even units must round up; 1,058.8 boxes means you need 1,059 to be safely at or above zero profit.
• Treating a one-time launch cost as monthly. Mixing startup spend into recurring fixed costs makes monthly break-even look impossibly high.

How to do break-even by hand or in Excel

You can reproduce this calculator with three spreadsheet cells. Put fixed costs in A1, price in B1, and variable cost in C1.

• Contribution margin: =B1-C1
• Break-even units (rounded up): =ROUNDUP(A1/(B1-C1),0)
• Break-even revenue: =ROUNDUP(A1/(B1-C1),0)*B1
• Contribution-margin ratio: =(B1-C1)/B1 (format the cell as a percentage)
• Break-even revenue the direct way: =A1/((B1-C1)/B1) - this matches the units-times-price result to the penny.

To solve for a target profit, add the goal to fixed costs: =ROUNDUP((A1+TargetProfit)/(B1-C1),0). To guard against an impossible case, wrap it in a check: =IF(B1<=C1,"No break-even - price below variable cost",ROUNDUP(A1/(B1-C1),0)). Doing it by hand once is the fastest way to internalize that contribution margin, not price, is the engine of the whole calculation.

Is my break-even good? Reference benchmarks

There is no universal "good" break-even number - it is good when you can realistically beat it with room to spare. Judge it against your market size and your margin of safety, not against another industry.

• Margin of safety above ~20% is generally comfortable for a small business - it means sales can drop a fifth before you hit zero profit. Below 10% is fragile.
• Contribution-margin ratio varies widely by model: software and services often run 70-90% (few sales clear break-even), while retail and food sit closer to 30-50% (volume-driven). Compare yourself to your own model, not across them.
• Time to break even matters as much as volume. Break-even of 800 cups is easy at 27/day in a busy location and impossible in a quiet one - always convert units into a daily or weekly run rate you can sanity-check.

If your required volume is a large fraction of your entire addressable market, the plan is risky regardless of how clean the math looks. Pair this with the business loan calculator if borrowed startup money adds fixed interest cost to the picture.

Advanced uses: pricing tests, new products, and the make-or-break decision

Break-even is a fast viability filter for any pricing or product decision before you spend real money, because it converts an abstract "will this work" into a hard sales count.

• Pricing tests. Enter two candidate prices and read how each changes required volume. A 10% price increase often cuts break-even units sharply because the entire increase flows straight into contribution margin.
• New-product go/no-go. Estimate the new line's own fixed costs and margin; if break-even volume exceeds what the market can plausibly absorb, the product fails on paper before launch.
• Discount limits. A discount cuts price and therefore margin, so it raises break-even volume. The tool shows exactly how many extra units a promotion must generate just to stand still.
• Fixed-vs-variable trade-offs. Switching from in-house production (high fixed, low variable) to outsourcing (low fixed, high variable) changes both the break-even point and how risky low-volume months are.

Variations of the break-even formula

The single-product formula is the base; three common variations extend it, and all three still hinge on contribution margin.

• Multi-product (weighted) break-even. When you sell several items, blend their contribution margins by sales mix into a weighted average margin, then divide fixed costs by that. Skipping the weighting overstates the margin and understates required volume.
• Break-even in revenue dollars. Instead of units, divide fixed costs by the contribution-margin ratio: fixed / (margin / price). Useful when you do not sell discrete units, such as a service billed by the hour or project.
• Target-profit break-even. Add the desired profit to fixed costs before dividing. This converts the tool from a survival calculator into a goal-planning one.

All three share the same DNA: total contribution margin must rise to meet fixed costs. Once the contribution per sale is fixed, only the sales count moves.

Startup costs and the cash-flow caveat

Break-even measures accounting profit, not cash in the bank - a business can hit break-even on paper and still run out of cash. The formula uses fixed and variable costs, but it ignores timing: when customers pay late or you buy inventory months ahead, cash can go negative even at break-even volume.

Before launch, build a complete fixed-cost list - it is the input the formula is most sensitive to, and the one founders most often underestimate. The U.S. Small Business Administration provides a structured worksheet for this, which feeds directly into the fixed-cost field here. Separate the one-time launch spend (equipment, deposits, licensing) from the recurring monthly costs so your monthly break-even is not inflated by startup outlays you only pay once.

Break-even units by fixed cost and contribution margin

Your break-even point is fixed costs divided by the contribution margin per unit (price minus variable cost). The table below shows how many units you must sell to cover four common fixed-cost levels at three contribution margins, with fractional results rounded up because you cannot sell a partial unit. Notice that doubling the contribution margin roughly halves the units you need, which is why raising price or cutting variable cost is the fastest way to lower break-even.

Fixed costs	$20 margin	$40 margin	$60 margin
$10,000	500	250	167
$25,000	1,250	625	417
$50,000	2,500	1,250	834
$100,000	5,000	2,500	1,667

Example: $50,000 fixed costs at a $40 contribution margin is $50,000 / $40 = 1,250 units. At a $60 margin the same fixed costs need only 834 units (833.33 rounded up).

Related on this site

Profit Margin Calculator · Markup Calculator · ROI Calculator · Business Loan Calculator · Discount Calculator · Sales Tax Calculator

For a related deep dive, see SBA calculate startup costs.

Break-Even Calculator — frequently asked questions

What is contribution margin?

Price minus variable cost per unit — the amount each sale contributes to covering fixed costs.

Price below variable cost?

You can never break even — every sale loses money; raise price or cut variable cost.

What is contribution margin?

Price minus variable cost per unit — what each sale contributes to fixed costs.

How do I lower break-even?

Increase price, reduce variable cost, or cut fixed costs.

With $50,000 in fixed costs, an $80 price, and $30 variable cost, what is my break-even point?

You break even at 1,000 units, which is $80,000 in revenue. Each sale contributes $80 - $30 = $50 toward fixed costs (the contribution margin), so $50,000 / $50 = 1,000 units. Multiply by the $80 price for $80,000 in break-even sales. Selling unit 1,001 is your first profit; selling 999 still leaves a small loss. Try other numbers in the <a href="/break-even-calculator/">Break-Even Calculator</a>.

How many units must I sell to break even on $20,000 fixed costs at a $25 price and $10 variable cost?

You need 1,334 units, because you must round a fractional break-even up. The contribution margin is $25 - $10 = $15, so $20,000 / $15 = 1,333.33 units. You cannot sell a third of a unit, so round up to 1,334 to fully cover fixed costs; at 1,333 you are still a few dollars short. That is about $33,350 in revenue.

How do I calculate break-even in dollars instead of units?

Divide fixed costs by the contribution margin ratio (contribution margin divided by price). With $50,000 fixed costs, an $80 price, and $30 variable cost, the ratio is $50 / $80 = 0.625, so break-even revenue is $50,000 / 0.625 = $80,000. The dollar method is ideal for service or multi-product businesses where counting identical units does not make sense.

What is my margin of safety if I break even at 1,000 units but expect to sell 1,500?

Your margin of safety is 500 units, or 33.3% of expected sales. Margin of safety is forecast sales minus break-even sales: 1,500 - 1,000 = 500 units. As a percent it is 500 / 1,500 = 33.3%. That means sales could fall by up to one-third before you start losing money - a cushion against a slow month or an optimistic forecast.

How do I calculate break-even in Excel?

Use the formula =fixed/(price-variable) in one cell. For $10,000 fixed costs, a $40 price, and $15 variable cost, type =10000/(40-15) and Excel returns 400 units. Wrap it in ROUNDUP, as =ROUNDUP(10000/(40-15),0), so partial units round up. For break-even revenue, multiply the result by the price cell. The same logic powers the <a href="/break-even-calculator/">Break-Even Calculator</a>.

How many units do I need to hit a $12,000 profit, not just break even?

Add the target profit to fixed costs before dividing. With $30,000 fixed costs, a $60 price, a $35 variable cost (a $25 contribution margin), and a $12,000 profit goal, the math is ($30,000 + $12,000) / $25 = 1,680 units. Of those, 1,200 cover fixed costs and the extra 480 units times $25 produce the $12,000 profit.

How does a $5 price increase change my break-even point?

Raising price cuts your break-even because each sale contributes more. With $24,000 fixed costs, a $50 price, and a $20 variable cost, the contribution margin is $30 and break-even is $24,000 / $30 = 800 units. Lift the price to $55 and the margin rises to $35, so break-even drops to $24,000 / $35 = 686 units (rounded up). That is 114 fewer units to reach profit.

How much does cutting variable cost by $5 lower my break-even?

Trimming variable cost raises the contribution margin and lowers break-even. With $18,000 fixed costs, a $45 price, and a $25 variable cost, the margin is $20 and break-even is 900 units. Cut variable cost to $20 and the margin becomes $25, so break-even falls to $18,000 / $25 = 720 units. That is 180 fewer units - the same direction as a price increase.

What is my break-even per day if my monthly fixed costs are $6,000?

You need about 12 units a day. With $6,000 monthly fixed costs, a $30 price, and a $12 variable cost, the margin is $18 and monthly break-even is $6,000 / $18 = 333.3 units. Spread over 30 days that is 11.1 units per day, so plan for 12 to stay above water. Daily targets turn an abstract number into a concrete sales goal.

How do I calculate break-even for a service business with no units?

Use the contribution margin ratio on revenue dollars instead of units. If 40% of each dollar of revenue goes to direct (variable) costs, your contribution margin ratio is 60%. With $8,000 in monthly fixed costs, break-even revenue is $8,000 / 0.60 = $13,333. There are no physical units to count, so the dollar method is the standard approach for consultants, agencies, and salons.

How is break-even different from ROI?

Break-even finds the sales volume that produces zero profit; <a href="/roi-calculator/">ROI</a> measures the return on money already spent. Say you invest $5,000 in fixed costs with a $25 contribution margin; break-even is 200 units. Sell 300 units and the extra 100 times $25 is $2,500 profit, an ROI of $2,500 / $5,000 = 50%. Break-even is the starting line; ROI scores the race once you cross it.

Why does my break-even number have a decimal, and should I round up?

Round up, because a fraction of a unit cannot be sold. With $7,500 fixed costs, a $19 price, and an $11 variable cost, the margin is $8 and break-even is $7,500 / $8 = 937.5 units. At 937 units you are still $4 short of covering fixed costs, so you must sell 938 to truly break even. The calculator shows the exact figure; round up for a real-world target.

How do I handle an owner salary in my break-even calculation?

Treat a fixed owner salary as a fixed cost, adding it to rent and other overhead. With a $40,000 salary plus $14,000 in other fixed costs, total fixed costs are $54,000. At a $120 price and $45 variable cost the contribution margin is $75, so break-even is $54,000 / $75 = 720 units. Leaving your own pay out understates break-even and makes a venture look more viable than it is.

Can I break even if my price is below my variable cost?

No, you can never break even when price is below variable cost. The contribution margin turns negative, so every sale loses money and adds to your shortfall instead of covering fixed costs. With a $12 price and a $15 variable cost, each unit loses $3, and selling more only deepens the hole. You must raise the price above $15 or cut variable cost below $12 before any break-even exists.

How do I break even on $15,000 in fixed costs selling a $12 product with a $4.50 variable cost?

You break even at 2,000 units, or $24,000 in revenue. The contribution margin is $12 - $4.50 = $7.50, so $15,000 / $7.50 = 2,000 units exactly. Multiply by the $12 price to get $24,000 in break-even sales. Because the margin divides evenly there is no rounding here; unit 2,001 delivers your first $7.50 of profit.

Guides & articles

• Contribution Margin: What Each Sale Puts Toward Your Fixed Costs
• Margin of Safety: How Much Cushion You Have Above Break-Even

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