What is the break-even point formula?

Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The denominator is the contribution margin. Example: $10,000 fixed, $20 price, $5 variable → $10,000 ÷ $15 = 667 units. Multiply by price for break-even revenue ($13,333).

What counts as a fixed vs variable cost?

Fixed: costs that arrive regardless of sales — rent, insurance, salaries, software subscriptions, loan payments, your own pay. Variable: costs that scale per unit — materials, packaging, shipping, payment processing fees, sales commissions. Gray areas like utilities can be split; when unsure, classify by the question 'does this go up if I sell one more unit?'

How do I lower my break-even point?

Three levers, in order of typical impact: raise price (every dollar drops straight into contribution margin), cut variable cost per unit (better supplier terms, cheaper shipping), cut fixed costs (renegotiate rent, drop unused subscriptions). A 10% price increase usually moves break-even far more than a 10% fixed-cost cut — run both in the calculator and compare.

What's a good margin of safety?

25-50% above break-even is a common comfort zone for an established product; under 10% means a mild bad month puts you in the red. New ventures should stress-test harder: if your launch forecast has to be 90% right just to break even, the plan has no room for reality.

How does break-even work for a service business or SaaS?

Replace 'units' with billable hours, clients, or subscribers. A freelancer with $3,000/month of fixed costs charging $100/hour with ~$10/hour of variable cost breaks even at 34 hours/month. For SaaS, contribution margin per subscriber is price minus hosting/support per user — break-even subscribers = monthly fixed burn ÷ that margin.

Why does my accountant's break-even differ from this one?

Usually scope: accountants often include depreciation, taxes, interest, and owner draws in fixed costs, and may use contribution margin after sales commissions and discounts. This calculator computes exactly what you feed it — feed it the full cost picture and the numbers converge.

Money & Finance · Free tool

Break-Even Calculator

Find the exact unit sales volume needed to cover all fixed and variable costs online for free. Analyze new product viability or pricing decisions instantly in your browser.

Updated June 2026

Fixed costs ($)Variable cost / unit ($)Price / unit ($)Expected sales (units) — optional

Break-even units

667

Break-even revenue

$13,333.33

Contribution / unit

$15.00

Margin of safety

334 units (33.3%)

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What it does

Find how many units you need to sell to cover fixed and variable costs. Critical for new products and pricing decisions. Money math compounds: small percentage differences over years become large dollar differences.

Federal Reserve rate decisions, tax law changes, and inflation shifts all change the optimal answer year-over-year. The gap between “rough estimate” and “defensible number” is exactly where good tooling earns its keep — the math is reproducible, but knowing which inputs matter and what the result means is half the work.

Always cross-check calculator output against published sources (IRS.gov for taxes, FRED for rates, Bankrate for current product pricing). A common pitfall: comparing pre-tax to after-tax numbers without normalizing. Treat the tool’s output as a starting point and validate against authoritative sources for any consequential decision.

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Example input & output

Input

Fixed costs: $10,000
Variable cost: $5/unit
Price: $20/unit
Expected sales: 1,000 units

Output

Contribution margin: $15/unit
Break-even: 667 units ($13,333 revenue)
Margin of safety: 333 units (33.3%)

Each unit contributes $15 toward the $10,000 of fixed costs. Selling 1,000 units means you could lose a third of expected volume and still not lose money.

How to use it

Enter your fixed costs — rent, salaries, insurance, software: everything that doesn't change with volume.
Enter the variable cost per unit and your selling price per unit.
Optionally enter expected sales to see your margin of safety.
Read break-even units and break-even revenue; adjust price to see how the threshold moves.

How it works

The core quantity is contribution margin: price − variable cost — what each unit contributes toward fixed costs. Break-even is fixed costs ÷ contribution margin, rounded up (you can’t sell two-thirds of a unit). Margin of safety is how far expected sales sit above that threshold: (expected − break-even) ÷ expected. If price doesn’t exceed variable cost, no volume ever breaks even — the tool flags this.

Common mistakes when using this tool

Misclassifying costs. Payment processing, shipping, and packaging are variable (per unit); rent, salaries, and subscriptions are fixed. Putting a variable cost in fixed understates break-even badly at volume.
Forgetting your own salary. “Break-even” while paying yourself nothing is a loss. Put a real owner salary in fixed costs.
Reading break-even as the goal. It’s the survival floor. Price and plan for a margin of safety of 25%+ — demand forecasts are always wrong in one direction or the other.

When to use this tool

Before launching a product: how many units must sell each month before profit starts?
Pricing decisions — see how a $2 price increase moves the break-even threshold.
Evaluating a fixed-cost commitment (lease, hire, equipment) in units-you-must-sell terms.
Lender and investor conversations — break-even volume is one of the first questions asked.

When not to use it

Businesses with no meaningful per-unit cost (pure services, SaaS) — break-even is about covering fixed costs with contribution; model it monthly instead of per unit.
Multi-product companies — each product's contribution margin differs; compute a weighted average or model lines separately.
Step-cost situations — if selling 2x volume requires a second machine or shift, fixed costs aren't fixed across the range.

Common use cases

Coffee cart: $10,000/yr fixed, $1.20 cost per cup, $4.50 price — how many cups a day pay the rent?
Etsy seller checking whether a $300/month studio is justified at current order volume.
Startup modeling how a price drop from $25 to $20 changes required sales volume.
Restaurant owner translating monthly overhead into covers-per-night needed to stay open.

Frequently asked questions

What is the break-even point formula?: Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The denominator is the contribution margin. Example: $10,000 fixed, $20 price, $5 variable → $10,000 ÷ $15 = 667 units. Multiply by price for break-even revenue ($13,333).
What counts as a fixed vs variable cost?: Fixed: costs that arrive regardless of sales — rent, insurance, salaries, software subscriptions, loan payments, your own pay. Variable: costs that scale per unit — materials, packaging, shipping, payment processing fees, sales commissions. Gray areas like utilities can be split; when unsure, classify by the question 'does this go up if I sell one more unit?'
How do I lower my break-even point?: Three levers, in order of typical impact: raise price (every dollar drops straight into contribution margin), cut variable cost per unit (better supplier terms, cheaper shipping), cut fixed costs (renegotiate rent, drop unused subscriptions). A 10% price increase usually moves break-even far more than a 10% fixed-cost cut — run both in the calculator and compare.
What's a good margin of safety?: 25-50% above break-even is a common comfort zone for an established product; under 10% means a mild bad month puts you in the red. New ventures should stress-test harder: if your launch forecast has to be 90% right just to break even, the plan has no room for reality.
How does break-even work for a service business or SaaS?: Replace 'units' with billable hours, clients, or subscribers. A freelancer with $3,000/month of fixed costs charging $100/hour with ~$10/hour of variable cost breaks even at 34 hours/month. For SaaS, contribution margin per subscriber is price minus hosting/support per user — break-even subscribers = monthly fixed burn ÷ that margin.
Why does my accountant's break-even differ from this one?: Usually scope: accountants often include depreciation, taxes, interest, and owner draws in fixed costs, and may use contribution margin after sales commissions and discounts. This calculator computes exactly what you feed it — feed it the full cost picture and the numbers converge.

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