Business planning
Break-Even Calculator Guide
A break-even calculator estimates how many units a business must sell before revenue covers costs. It is useful when pricing a product, launching a service, planning ad spend, or deciding whether a new offer is viable.
Open the break-even calculator and enter fixed costs, price per unit, and variable cost per unit.
Break-Even Formula
Break-even units = fixed costs / (price per unit - variable cost per unit)
The amount inside parentheses is contribution margin per unit.
Worked Example
Suppose fixed costs are $3,500, the selling price is $85, and variable cost is $42 per unit. Contribution margin is $43 per unit. The break-even point is 82 units because $3,500 divided by $43 rounds up to 82.
| Input | Example | Meaning |
|---|---|---|
| Fixed costs | $3,500 | Costs that do not change much with each unit sold. |
| Price per unit | $85 | What the customer pays. |
| Variable cost | $42 | Cost that comes with each unit. |
| Break-even | 82 units | Sales volume needed before profit starts. |
Fixed Costs vs Variable Costs
Fixed costs can include rent, core software, insurance, salaries, equipment leases, and base marketing commitments. Variable costs can include materials, packaging, shipping, payment processing, sales commissions, and contractor labor tied to each sale.
When Break-Even Is Most Useful
- Testing whether a new product price is realistic.
- Estimating how many customers a paid ad campaign must generate.
- Comparing a premium product with a lower-cost product.
- Understanding whether cost cuts or price changes matter more.
If a campaign has $1,000 of fixed creative and setup cost, and each sale contributes $40 after variable costs, the campaign needs 25 sales before it breaks even on that setup cost.
FAQ
The business loses money on each unit before fixed costs. The calculator should show that there is no break-even point.
Sales taxes collected for the government are usually not revenue. Income taxes may be part of broader planning but are not usually included in a simple break-even calculation.
Yes. Supplier prices, wages, rent, shipping, and discounts can all move the break-even point.