Break-Even Calculator
Calculate the number of units and sales revenue you need to cover your total costs and reach the break-even point.
Formula
Break-Even Units = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)
Quick Examples
What is the Break-Even Calculator used for?
The Break-Even Calculator is used to find the sales level at which total revenue equals total costs, meaning there is neither a profit nor a loss. This point is called the break-even point. It is useful when evaluating product prices, sales targets, or business costs because it shows how many units must be sold before earnings begin to exceed expenses.
What formula is used to calculate break-even quantity?
The standard break-even formula is Break-Even Quantity = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit). The amount in parentheses is the contribution margin per unit, which represents what remains from each sale after its variable cost. If fixed costs are $8,000 and the contribution margin is $40, the break-even quantity is 200 units.
How do fixed costs affect the break-even point?
Fixed costs have a direct effect on how many units must be sold to reach break-even. When the selling price and variable cost stay unchanged, higher fixed costs increase the break-even level, while lower fixed costs reduce it. For example, if fixed costs rise from $4,000 to $6,000 while the contribution margin remains $20 per unit, more units must be sold to cover those additional costs.
How does the selling price change the break-even point?
The selling price affects the contribution margin and therefore the break-even sales required. If the variable cost remains the same, raising the selling price increases the contribution margin and generally lowers the number of units needed to break even. Lowering the price has the opposite effect. For example, a $70 selling price with a $40 variable cost gives a $30 contribution margin per unit.