Break-Even Calculator

The break-even point is the level of sales at which total revenue equals total costs — you neither profit nor lose money. Below break-even you're losing money; above it you're profitable. It's a critical metric for pricing, budgeting, and business planning decisions.

Break-even units = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit). Break-even revenue = Fixed Costs ÷ Contribution Margin Ratio. The difference between selling price and variable cost per unit is called the contribution margin.

Contribution margin is the amount each unit sold contributes toward covering fixed costs and generating profit: Contribution Margin = Selling Price − Variable Cost per Unit. Contribution Margin Ratio = Contribution Margin ÷ Selling Price. A higher contribution margin means fewer units needed to break even.

Fixed costs remain constant regardless of sales volume (rent, insurance, salaries, equipment depreciation). Variable costs change in proportion to production volume (raw materials, packaging, sales commissions, direct labor). The break-even formula requires this distinction.

Margin of safety is the difference between your current or target sales and the break-even point. It shows how much sales can drop before you start losing money: Margin of Safety = (Expected Sales − Break-Even Sales) ÷ Expected Sales × 100%. A margin of safety above 20–25% is generally considered healthy.

Yes. For service businesses, replace 'units' with service hours, projects, or clients. Fixed costs include office rent, software subscriptions, and minimum staff costs. Variable costs include contractor fees, materials, and commission. The formula works identically.