Free Break-Even Calculator

The break-even point is the sales level where total revenue equals total costs — no profit, no loss. Beyond this point, every additional unit sold generates net profit. It is a fundamental analysis for any business plan and for evaluating the economic feasibility of a project.

The formula is: Fixed Costs / (Selling Price - Variable Cost per Unit). For example, with $10,000 in fixed costs, a $50 selling price, and $25 variable cost, break-even is 10,000 / (50-25) = 400 units. Break-even revenue is 400 × $50 = $20,000.

Fixed costs remain constant regardless of production volume: rent, salaries, insurance, depreciation. Variable costs change with the volume produced: raw materials, packaging, sales commissions, shipping costs.

The contribution margin is the difference between the selling price and the variable cost per unit. It shows how much each unit sold “contributes” toward covering fixed costs. The higher it is, the fewer units you need to break even.

Three strategies: 1) Reduce fixed costs (renegotiate rent, outsource). 2) Reduce variable costs (cheaper suppliers, automation). 3) Increase the selling price (if the market allows). Use the What-If mode to simulate each scenario.

In a business plan, break-even analysis demonstrates economic feasibility: how long and how many sales are needed to cover the initial investment. Banks and investors require it to assess risk. A break-even achievable within 6-12 months is considered a good indicator of sustainability.

Absolutely. For services, the price is the hourly rate or project cost, and variable costs include staff time, software, travel. Break-even shows how many billable hours or clients are needed to cover fixed costs like office rent and salaries.

The margin of safety measures how far current sales exceed the break-even point, expressed as a percentage. A 30% margin means sales can drop 30% before the business starts losing money. It is a key indicator of business resilience, essential for financial planning.

Recalculate break-even whenever fixed costs change (new lease, hiring), variable costs shift (raw material increases), or pricing changes. As a rule of thumb, at least every quarter and before any major strategic decision like launching a new product.

For e-commerce, fixed costs include platform fees, hosting, software subscriptions, and fixed marketing spend. Variable costs are: product cost, shipping, payment gateway fees (2-3%), packaging, and returns. Break-even shows how many monthly orders are needed to cover fixed costs. See the detailed example above.