How to use this calculator
Enter three numbers.
- Fixed costs: costs that stay the same no matter how much you sell, such as rent, salaries, insurance and software. Pick one period, such as a month or a year, and use it throughout.
- Price per unit: what a customer pays for one unit.
- Variable cost per unit: costs that rise with every unit sold, such as materials, packaging, shipping and payment fees.
The calculator returns break-even units and break-even revenue for that period, the contribution margin per unit and the contribution margin ratio. The chart plots revenue against total cost so you can see where the two lines cross.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Fixed costs
- $50,000
- Price per unit
- $40
- Variable cost per unit
- $15
- Break-even units
- 2,000
- Break-even revenue
- $80,000
- Contribution margin per unit
- $25.00
- Contribution margin ratio
- 62.5%
How the break-even point is calculated
The contribution margin is what one sale leaves over after its own variable cost. If you sell a unit for $50 and it costs $30 to make and ship, the contribution margin is $20. That $20 goes toward fixed costs first, and turns into profit once they are covered.
Break-even units are fixed costs divided by the contribution margin per unit. Break-even revenue is break-even units multiplied by price. The contribution margin ratio is the contribution margin divided by price, shown as a percent. In the example, $20 ÷ $50 is 40%, so 40 cents of every sales dollar is available to cover fixed costs.
If the price is equal to or lower than the variable cost, every sale loses money and there is no break-even point at any volume.
Break-even units = F ÷ (P − V)- F
- fixed costs for the period
- P
- price per unit
- V
- variable cost per unit
- P − V
- contribution margin per unit
How to read the results
Break-even is the sales level where profit is exactly zero. Below it you run at a loss. Above it, each extra unit adds its full contribution margin to profit.
- Compare it with realistic demand. A break-even of 500 units means little until you know whether you can sell 300 or 3,000 in the same period.
- Test one change at a time. Raise the price, cut the variable cost or trim fixed costs, and watch how far the break-even point moves. Small price changes often move it more than people expect.
- Watch the gap on the chart. Past the crossing point, the distance between the revenue line and the total cost line is your profit at each volume.
The model assumes one product, a steady price and costs that behave in a straight line. Real businesses have discounts, product mixes and costs that step up with volume, so treat the answer as a planning estimate. For a fuller walk-through, read how to calculate a break-even point, or check your pricing with the profit margin calculator.
Frequently asked questions
What is a break-even point?
The break-even point is the level of sales where total revenue equals total cost, so profit is zero. It can be stated in units sold or in sales dollars. Below that level the business loses money, and above it the business earns a profit. Owners use it to set sales targets, test prices and judge whether a new product or location is realistic.
What is the difference between fixed and variable costs?
Fixed costs stay roughly the same whether you sell one unit or one thousand. Rent, salaried staff, insurance and subscriptions are common examples. Variable costs rise and fall with sales volume, such as materials, packaging, shipping and sales commissions. Some costs are mixed, like a utility bill with a base charge plus usage. Split those into their fixed and variable parts as best you can.
How do I calculate break-even for more than one product?
Use a weighted average. Work out the contribution margin for each product, then weight each one by its share of total units sold. Divide fixed costs by that weighted average margin to get total break-even units, and split the total by the same sales mix. The answer only holds while the mix stays the same, so rerun it when your best sellers change.
How can I lower my break-even point?
There are three levers. You can raise the price, which widens the margin on every sale. You can lower the variable cost per unit through cheaper inputs, less waste or better supplier terms. Or you can cut fixed costs such as rent and subscriptions. Each lever has trade-offs, since a higher price may reduce demand and cheaper inputs may affect quality.
What is a contribution margin ratio?
The contribution margin ratio is the share of each sales dollar left after variable costs. You get it by dividing the contribution margin per unit by the price per unit. A ratio of 40% means 40 cents of every dollar goes toward fixed costs and then profit. Dividing fixed costs by this ratio gives break-even revenue directly, which is handy when you sell services instead of units.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.