Finance & Business
Break-Even Analysis Calculator - Calculate Break-Even Point
Calculate break-even point in units and revenue. Analyze fixed costs, variable costs, and pricing to determine when your business becomes profitable. Includes margin of safety and target profit analysis.
Use Break-Even Analysis Calculator - Calculate Break-Even Point to get instant results without uploads or sign-ups. Everything runs securely in your browser for fast, reliable output.
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About this tool
Our Break-Even Analysis Calculator is the most comprehensive free tool for determining when your business will become profitable. Break-even analysis is one of the most fundamental concepts in business planning, answering the critical question: "How many units must I sell to cover all costs?" This calculation is essential for startups validating business models, existing businesses launching new products, and anyone making pricing decisions. The break-even point is where total revenue equals total costs - selling fewer units means losses, selling more means profit. Understanding this threshold helps you set realistic sales targets and evaluate business viability.
The calculator uses the classic break-even formula: Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit). Fixed costs are expenses that don't change with sales volume: rent, salaries, insurance, loan payments, software subscriptions. Variable costs change with each unit sold: materials, direct labor, packaging, shipping, sales commissions. The contribution margin (selling price minus variable cost) shows how much each unit contributes to covering fixed costs and generating profit. A higher contribution margin means you reach break-even faster and earn more profit per additional sale.
Beyond basic break-even, the calculator computes margin of safety - how much sales can drop before you hit break-even. This reveals risk: a 10% margin means any sales decline over 10% causes losses. High margins of safety (40%+) indicate stable, low-risk businesses. The tool also calculates units and revenue needed to achieve target profits, essential for goal setting. If you want $100K profit and earn $50 contribution per unit, you need to sell 2,000 units beyond break-even. Understanding these relationships helps you make informed decisions about pricing, cost control, and sales targets.
The calculator includes visual indicators showing whether you're above or below break-even at your current sales level, and how changes in pricing or costs affect profitability. It's perfect for business plans, loan applications, investor presentations, and strategic planning. The tool is completely free, requires no registration, and works entirely in your browser. Ideal for entrepreneurs, business students, financial analysts, and anyone evaluating business opportunities or pricing strategies.
Usage examples
Coffee Shop
$10K/month fixed, $2 variable cost, $6 selling price
Break-even: 2,500 cups/month, $15K revenue, $4 contribution margin
SaaS Product
$50K/month fixed, $5 variable cost, $100 monthly subscription
Break-even: 527 customers, $52.7K revenue, high contribution margin
Manufacturing Product
$100K/month fixed, $40 variable cost, $75 selling price
Break-even: 2,857 units, $214K revenue, $35 contribution margin
Service Business
$8K/month fixed, $25 variable cost, $100 hourly rate
Break-even: 107 hours, $10.7K revenue, $75 contribution margin
How to use
- Enter your fixed costs (rent, salaries, insurance, etc.)
- Input variable cost per unit (materials, direct labor)
- Specify selling price per unit
- Optionally set a target profit goal
- Enter actual or projected sales for margin of safety
- View break-even point, margin of safety, and profit analysis
Benefits
- Calculate break-even point in units and revenue
- Contribution margin analysis per unit
- Margin of safety calculation
- Target profit unit requirements
- Fixed and variable cost breakdown
- Instant what-if scenario analysis
- Visual indicators for profitability status
- Compare different pricing strategies
- Mobile-friendly for meetings
- No registration required - free
- Based on standard accounting principles
- Essential for business planning and pricing
FAQs
What is break-even point?
Break-even point is the sales level where total revenue equals total costs, resulting in zero profit or loss. It's expressed in units (quantity to sell) or dollars (revenue needed). Below break-even you lose money; above it you profit. Formula: Fixed Costs ÷ Contribution Margin per Unit. Example: $10,000 fixed costs ÷ $50 contribution margin = 200 units to break even. It's the minimum sales target for business viability.
What is contribution margin?
Contribution margin is selling price minus variable cost per unit. It's the amount each unit "contributes" toward covering fixed costs and generating profit. Example: $100 price - $40 variable cost = $60 contribution margin. Higher contribution margins are better - they mean faster break-even and higher profit potential. Contribution margin ratio = Contribution Margin ÷ Selling Price. A 60% contribution margin ratio means 60 cents of each dollar goes toward fixed costs and profit.
What are fixed costs vs variable costs?
Fixed costs stay constant regardless of sales volume: rent, salaries, insurance, loan payments, software, utilities (base amount). Variable costs change with each unit sold: materials, direct labor, packaging, shipping, commissions, payment processing fees. Understanding the difference is crucial for break-even analysis. Some costs are mixed (partly fixed, partly variable) - separate them. Fixed costs determine your risk; variable costs affect margin.
What is margin of safety?
Margin of safety measures how far sales can drop before reaching break-even. Formula: (Actual Sales - Break-Even Sales) ÷ Actual Sales × 100. Example: $200K sales with $150K break-even = 25% margin of safety. Sales can drop 25% before losses occur. High margins (40%+) indicate low risk and stable businesses. Low margins (under 15%) mean high risk - small sales declines cause losses. Always aim to increase your margin of safety.
How can I lower my break-even point?
Four strategies: 1) Reduce fixed costs (cheaper rent, outsource instead of hiring). 2) Reduce variable costs per unit (negotiate supplier prices, improve efficiency). 3) Increase selling price (if market allows). 4) Improve product mix toward higher-margin items. The most impactful is usually reducing fixed costs since they're the numerator in break-even formula. Even small reductions in fixed costs significantly lower break-even point.
How do I calculate units needed for target profit?
Formula: (Fixed Costs + Target Profit) ÷ Contribution Margin per Unit. Example: Want $50K profit with $100K fixed costs and $40 contribution margin = ($100K + $50K) ÷ $40 = 3,750 units. This shows exactly how many sales you need for your profit goal. For revenue target: multiply units by selling price. This is essential for business planning, goal setting, and evaluating if targets are realistic.
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