Break-Even Calculator
Find how many units you must sell to cover your costs. Enter fixed costs, price and variable cost per unit for break-even units and revenue, contribution margin, the sales needed for a target profit and your margin of safety.
How to Use
- Choose a mode: Break-even units (you know your price), Price needed (you know how many you will sell) or CM ratio (a service business with no unit count).
- Enter fixed costs for the period — rent, salaries, insurance, loan payments — and the variable cost of each unit sold.
- Enter the selling price (or the planned number of units in Price mode, or the contribution-margin ratio in CM ratio mode).
- Optionally add a target profit and your expected sales to see the units needed for that profit and your margin of safety.
- Read the results and the cost-volume-profit chart: the red area is loss, the green area profit, and the lines cross at break-even.
Worked Example
A coffee cart. Fixed costs are $4,500 a month; a cup sells for $4.50 and its cup, coffee and milk cost $1.35. Each cup contributes $4.50 − $1.35 = $3.15, a 70% contribution-margin ratio. Break-even = $4,500 ÷ $3.15 = 1,428.57, so the cart must sell 1,429 cups, or $6,428.57, a month. For a $3,000 profit it needs ($4,500 + $3,000) ÷ $3.15 = 2,380.95, so 2,381 cups. Expecting 2,000 cups, its margin of safety is 571.43 cups (28.57%) and its profit $1,800.
Pricing a workshop. A 120-seat workshop has $8,000 of fixed costs and $35 of costs per attendee, and should make $2,000. Price = $35 + ($8,000 + $2,000) ÷ 120 = $118.33, so charge at least $118.34. At that price, 96 tickets cover the costs.
The common mistake: dividing by the price. $4,500 ÷ $4.50 = 1,000 cups looks like a break-even figure, but each cup also costs $1.35 to make, so only $3.15 of it pays the fixed costs. Selling 1,000 cups leaves the cart $1,350 short. Always divide by the contribution margin, not the price.
Show Work
Formulas
The Break-Even Chart and Its Assumptions
The break-even chart — revenue and total cost drawn against volume, crossing at the point where profit is zero — is usually traced to the engineer Henry Hess, who published one in 1903, and was popularised by the Columbia University professor Walter Rautenstrauch in the 1920s and 1930s. It became a staple of management accounting as cost-volume-profit (CVP) analysis.
The straight lines rest on assumptions worth knowing. The price per unit and the variable cost per unit stay the same at every volume; fixed costs stay fixed over the range you are looking at (a second shop or a new machine adds a step); everything made is sold; and with several products the sales mix does not change. When these hold roughly, CVP is a fast and reliable planning tool. When they do not — volume discounts, overtime, price cuts to sell more — treat the answer as a first estimate and recalculate for each range.
About This Calculator
This calculator finds the break-even point three ways: in units from your price and costs, as the price you need to charge for a planned volume, or as revenue from a contribution-margin ratio when you do not sell countable units. It adds the units or revenue needed for a target profit and the margin of safety at your expected sales, and draws the cost-volume-profit chart with the loss and profit areas shaded. A summary table lists every figure, and each one copies on click.
Everything runs in your browser; nothing you enter is sent anywhere. It suits founders, small-business owners, students of managerial accounting and anyone pricing a product or an event. Estimates for planning and education — not financial, tax or legal advice.
Related tools: Margin Calculator, ROI Calculator, and Payback Period Calculator.
Frequently Asked Questions
How do I calculate the break-even point?
Divide fixed costs by the contribution margin per unit (price minus variable cost). A coffee cart with $4,500 of monthly fixed costs selling at $4.50 with $1.35 of variable cost earns $3.15 per cup towards fixed costs, so it breaks even at 4,500 ÷ 3.15 = 1,428.57 cups — 1,429 in practice — or $6,428.57 of sales.
What is the contribution margin ratio?
The share of each sales dollar left after variable costs: contribution margin ÷ price. $3.15 ÷ $4.50 = 70%. Break-even revenue is fixed costs ÷ that ratio, $4,500 ÷ 0.70 = $6,428.57, which is why service businesses that do not count units can still find their break-even point.
How many units do I need to sell for a target profit?
Add the target profit to fixed costs and divide by the contribution margin: ($4,500 + $3,000) ÷ $3.15 = 2,380.95, so the coffee cart needs 2,381 cups for a $3,000 monthly profit.
What is the margin of safety?
How far sales can fall before you make a loss: expected sales minus break-even sales. At 2,000 cups a month the coffee cart is 571.43 cups, or 28.57% of sales, above break-even, and makes $1,800 profit.
How does a price rise change break-even?
It raises the contribution margin, so fewer units are needed. Raising the coffee price from $4.50 to $5.00 lifts the margin from $3.15 to $3.65 and drops break-even from 1,429 to 1,233 cups — provided customers keep buying at the higher price.
How do I use the Break-Even Calculator?
Simply type your numbers and read the result, which refreshes the instant you change something. There is nothing to submit and nothing to wait for.
Is it free? Does it work without internet?
Yes to both. It is free with no sign-up, and once the page has loaded it keeps working even with no internet.
Where does my data go?
Nowhere — every calculation runs on your own device. Nothing you enter is uploaded, logged, or stored.
Common Use Cases
Starting a small business
An e-commerce T-shirt shop with $12,000 of monthly fixed costs, a $25 price and $11 of variable cost per shirt must sell 858 shirts, $21,428.57, to break even.
Pricing an event
A workshop with $8,000 of fixed costs, $35 per attendee and 120 seats must charge at least $118.34 a ticket to make a $2,000 profit.
Factory planning
$250,000 of annual fixed costs, an $80 price and $48 of variable cost: break-even is 7,813 units, and a $100,000 profit needs 10,938.
Subscription and service firms
With $60,000 of monthly fixed costs and an 80% contribution-margin ratio, break-even revenue is $75,000; at $90,000 of revenue the margin of safety is 16.67%.
Checking a bad month
If the T-shirt shop sells only 700 shirts, it is 157.14 shirts short of break-even and loses $2,200.
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