Break-Even Point Calculator
Turn fixed cost, unit price, variable cost, and a target profit into contribution margin, whole-unit thresholds, and the matching revenue.
Calculate break-even and target-profit volume
Use amounts on the same time basis and currency. Put only costs that change with each unit in variable cost; put the period’s volume-independent costs in fixed costs.
Primary result
At $80.00 per unit and $32.00 variable cost, each unit contributes $48.00. The entered fixed cost is covered at 250 whole units.
Find the threshold before forecasting sales
Break-even analysis separates revenue into the amount consumed by variable cost and the contribution remaining to cover fixed costs. Once cumulative contribution covers fixed costs, additional contribution becomes operating profit within this simplified model. The target-profit result answers the next question: how much volume is required to cover fixed costs and a chosen profit objective?
- Inputs: fixed costs for one period, selling price per unit, variable cost per unit, and optional target profit for the same period.
- Outputs: contribution margin and ratio, break-even units and revenue, target-profit units and revenue, and profit after whole-unit rounding.
- Best use: checking a proposed price or cost structure, setting a preliminary volume threshold, and comparing scenarios before a detailed financial model.
Formula and methodology
Contribution margin per unit = selling price − variable cost per unit. Contribution margin ratio equals contribution margin divided by selling price. Break-even units equal fixed costs divided by contribution margin per unit. Target-profit units equal fixed costs plus target profit, divided by contribution margin per unit.
The page rounds unit thresholds upward because selling a fraction of a unit is usually impossible. Revenue is then whole units multiplied by selling price. This is why profit at the target threshold can be slightly above the entered objective. If a business sells fractional billable quantities, the exact unrounded threshold may be more appropriate in a separate model.
Selling price must be greater than variable cost. If they are equal, each sale contributes nothing toward fixed costs. If variable cost exceeds price, selling more units deepens the loss under the linear assumptions, so no finite positive break-even volume exists.
Worked examples
Default scenario
At an $80 price and $32 variable cost, contribution margin is $48 per unit and the margin ratio is 60%. With $12,000 fixed cost, break-even volume is exactly 12,000 ÷ 48 = 250 units, corresponding to $20,000 revenue.
Adding a $10,000 target profit
The numerator becomes $12,000 + $10,000 = $22,000. Dividing by $48 gives 458.33 units, so the whole-unit target is 459. Revenue is $36,720, and contribution after fixed cost is $10,032.
Small margin sensitivity
If price remains $80 but variable cost rises to $72, contribution falls from $48 to $8. The same $12,000 fixed cost then requires 1,500 units, illustrating why a narrow margin produces a highly sensitive threshold.
Common mistakes
- Putting total variable cost in a field that expects variable cost per unit.
- Mixing monthly fixed costs with annual profit or volume.
- Leaving payment fees, fulfillment, commissions, returns, or other unit-driven costs out of variable cost.
- Using average selling price without considering product mix or discount changes.
- Treating break-even revenue as cash-flow break-even while ignoring payment timing, capital purchases, taxes, debt service, or working capital.
FAQ
What counts as a fixed cost?
Use costs that remain broadly unchanged across the volume range and time period being modeled, such as a period’s rent or base software subscriptions. A cost can be fixed in one decision range and step up in another.
Should labor be fixed or variable?
It depends on the decision. Hourly production labor may vary per unit, while salaried labor may behave as fixed cost until capacity requires another hire. State the treatment and test the alternative.
Can this model handle multiple products?
Not directly. A multiproduct analysis needs a stable sales mix or weighted average contribution margin. This page intentionally uses one price and one variable cost to keep the model auditable.
How this calculator helps
Use it to: Find the whole-unit sales volume and revenue needed to cover fixed costs or reach an entered target profit.
Inputs and example scenarios
These examples show how the result changes with different inputs. Change the values to match the decision you are making.
starting example: Fixed costs: 12000; Selling price per unit: 80; Variable cost per unit: 32; Target profit: 10000.
materially different higher break-even point calculator scenario: Fixed costs: 18000; Selling price per unit: 120; Variable cost per unit: 48; Target profit: 10000.
What changes the result
A small contribution margin makes break-even volume highly sensitive to price or variable-cost changes; fixed cost and target profit scale required units directly.
Formula and limitations
Contribution margin is selling price minus variable cost; break-even units equal fixed costs divided by contribution margin, rounded up, and target units add target profit to the numerator. The result uses a single-product linear cost-volume-profit identity and visitor-entered costs and price.