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Break-Even Calculator

Find how many units you must sell before fixed costs are covered, and how many more get you to a profit target.

Inputs
Break-even resultCalculated
Break-even point889 units (40,000.00 of sales)
Formula
Contribution marginprice - variable cost
Break-even unitsfixed costs / contribution margin
Break-even salesbreak-even units x price
Inputs
  Fixed costs              24,000.00
  Price per unit           45.00
  Variable cost per unit   18.00
  Target profit            0.00
Working
Contribution margin45.00 - 18.00 = 27.00 per unit
Break-even units24,000.00 / 27.00 = 888.8889
Break-even sales888.8889 x 45.00 = 40,000.00
Results
  Contribution margin per unit             27.00
  Contribution margin ratio                60.00%
  Break-even units (exact)                 888.8889
  Break-even units (whole units to sell)   889
  Break-even sales value                   40,000.00
  Units for the target profit              889
  Sales value for the target profit        40,000.00
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About the Break-Even Calculator

Break-even analysis splits spending into costs that stay the same whatever you sell and costs that arrive with each sale. Subtract the second from the price and you have the contribution margin, the slice of every sale that goes toward paying the rent. Divide fixed costs by that margin and you have the number of units at which the business stops losing money. At 24,000 of fixed costs, a 45 price and 18 of variable cost, the answer is 889 units and 40,000 of sales.

The contribution margin ratio, 60 percent in that example, is often more useful than the unit count because it survives a change in product mix. It tells you that six of every ten currency units taken at the till are available for fixed costs and profit. The target profit box treats a profit goal exactly like an extra fixed cost, so asking for 12,000 of profit moves the requirement to 1,334 units without any second calculation.

A guard rail applies: if the variable cost meets or beats the price, the tool refuses to answer, because a product that loses money on every unit never breaks even no matter how many you shift. Bear in mind that the model assumes one price and one variable cost, so a business with bundle discounts should run it per product line. Once you know the profit that survives, the EBIT Calculator puts it into an income statement shape.

How to use

  1. Add up rent, salaries, software and anything else that does not change with volume, and put the total in Fixed costs.
  2. Enter the price a customer pays for one unit.
  3. Enter the cost of producing or buying that single unit, including packing and card fees.
  4. Optionally set a target profit to see the volume needed to earn it.

Common questions

What is the break-even formula?
Break-even units = fixed costs divided by the contribution margin, where the contribution margin is the selling price minus the variable cost per unit.
Why does it round the unit count up?
You cannot sell a fraction of a unit, so the exact figure is shown as well as the next whole unit that clears the costs.
What if my variable cost is higher than my price?
The tool stops and says so. Every sale would deepen the loss, so no volume can reach break-even until the price rises or the unit cost falls.
Should my own salary go in fixed costs?
Yes, if you draw it regardless of sales. Anything paid per unit sold, such as a commission, belongs in the variable cost instead.