Break-even Calculator

Break-even Calculator

Find the sales volume and revenue needed to cover fixed and variable costs.

UNDERSTAND THE ANSWER

How is this calculated?

Price minus variable cost is the contribution margin per unit. Each sale contributes that amount toward fixed costs until profit reaches zero.

Break-even units formulaBreak-even units = Fixed costs ÷ (Price − Variable cost)

A practical example

With $25,000 in fixed costs and a $45 contribution margin, the business needs to sell 556 units to break even.

Assumptions, interpretation and common mistakes

Calculation assumptions

  • Selling price and variable cost per unit stay constant.
  • All fixed costs belong to the same analysis period.
  • Every unit produced is sold and product mix does not change.

How to interpret the result

  • Break-even units are rounded up because a partial unit usually cannot cover costs.
  • Contribution margin is the amount each sale contributes toward fixed cost and profit.
  • Sales beyond break-even produce contribution profit only if assumptions remain stable.

Common mistakes to avoid

  • Classifying semi-variable costs as fully fixed.
  • Using an average selling price that ignores discounts and returns.
  • Forgetting capacity limits or step costs at higher volume.