Break-even Calculator

What Is a Break-even Point?

The break-even point is the sales volume where total contribution covers fixed costs. At that point the modeled operating profit is zero.

How Do You Calculate Break-even?

First subtract variable cost per unit from price to find contribution margin. Divide fixed costs by that amount and round units up because a fraction of a unit normally cannot be sold.

Why Must Contribution Margin Be Positive?

If each sale costs as much as or more than its price, additional sales do not pay down fixed costs. Price must rise or variable cost must fall before a finite break-even point exists.

Formula

• Contribution margin = Price − Variable cost
• Break-even units = Fixed costs ÷ Contribution margin
• Break-even revenue = Break-even units × Price

Example

$2,000 fixed costs, a $50 price, and $20 variable cost require 67 whole units, or $3,350 in revenue.