How it works
Break-even is the sales volume at which contribution covers fixed costs for your selected period. Contribution is price less variable cost per unit.
The formula
Keep currency, units and time periods consistent. Percentage inputs use percentage points (enter 5 for 5%). Results are rounded only for display; tiny nonzero values may use scientific notation. Undefined ratios are shown as unavailable.
Selling price: $50; Variable cost / unit: $30; Fixed costs: $10,000; Contribution / unit: $20; Contribution margin: 40%; Break-even units: 500; Break-even revenue: $25,000; Units for $5,000 target profit: 750.
Calculation method
Fixed costs do not change with the modeled volume; variable costs are incurred on each unit. Mixing annual rent with monthly sales creates a misleading target.
Interpretation
Required units round upward, while theoretical break-even revenue uses the exact contribution ratio. Margin of safety compares actual volume with the unrounded threshold.
Limitations
A non-positive contribution cannot fund fixed costs. This simple model assumes a single product or a stable product mix and unchanged unit economics.
Method and reference sources
Method and content checked 2026-09-20. These sources provide background, not endorsement or professional certification. The formula and limitations above define this calculator.
- SBA — Break-even pointContribution, variable costs and fixed-cost break-even context; tool-specific extensions are explained above.
Frequently asked questions
Why is break-even unavailable when variable cost equals price?
There is no contribution from each unit to cover fixed costs. More sales at the same economics cannot cover positive fixed costs; change price or variable cost first.
What is a worked example for Break-Even Point?
Selling price: $50; Variable cost / unit: $30; Fixed costs: $10,000; Contribution / unit: $20; Contribution margin: 40%; Break-even units: 500; Break-even revenue: $25,000; Units for $5,000 target profit: 750.