Break-Even Calculator
The point where revenue stops covering losses and starts making profit.
How is a break-even point calculated?
Break-even analysis splits costs into fixed (rent, salaries — the same regardless of sales volume) and variable (materials, packaging — scaling with each unit sold). Each sale contributes its price minus its variable cost toward covering fixed costs — that gap is the contribution margin. Break-even units are simply fixed costs divided by the contribution margin per unit: sell fewer than that and you're running at a loss; sell more and every additional unit is pure profit above the fixed-cost line.
Frequently asked questions
What is the break-even point?
The number of units you need to sell so total revenue exactly equals total costs — fixed costs plus variable costs at that volume. Sell fewer and you're making a loss; sell more and you're in profit.
What's the difference between fixed and variable costs?
Fixed costs stay the same regardless of how much you sell — rent, salaries, insurance. Variable costs scale with each unit sold — materials, packaging, per-unit shipping.
How is contribution margin used in break-even analysis?
Contribution margin (price minus variable cost per unit) is how much each sale contributes toward covering fixed costs. Break-even units = fixed costs ÷ contribution margin — a higher contribution margin means you break even faster.
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