What is a break-even point?
The break-even point is the number of units a business needs to sell before total contribution covers its fixed costs.
Break-even formula
Break-even units = Fixed costs ÷ (Unit selling price − Variable cost per unit). The expression in parentheses is contribution per unit.
Example
With $10,000 fixed costs, a $100 selling price, and a $60 variable cost, contribution is $40. $10,000 ÷ $40 = 250 units.
Common mistakes
- Mixing monthly fixed costs with annual sales prices.
- Omitting per-unit delivery or payment costs.
- Assuming price and cost stay constant at every sales volume.
Frequently asked questions
- What is a break-even point?
- It is the sales volume where contribution from sales covers fixed costs, before profit begins.
- Why does the calculator round units up?
- A fraction of a unit cannot usually be sold, so the minimum required whole-unit count is rounded upward.
- What if my price is lower than variable cost?
- The business cannot reach break-even with those unit economics because each sale adds to the loss.
- Which period should I use?
- Use fixed costs and unit economics that belong to the same period, such as one month or one quarter.
- Does the calculation include tax and financing costs?
- Only if you include them in fixed or variable cost. The calculator does not add them automatically.
- Are my figures stored?
- No. The calculation happens locally in your browser without uploading your values.