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Break-Even Calculator

Estimate how many units you need to sell to cover fixed costs. Enter fixed costs, selling price per unit, and variable cost per unit to calculate break-even volume.

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Result

Break-even units
666.67

Units needed before profit starts, before rounding production or sales constraints.

Contribution margin per unit
$30.00

How break-even calculation works

The calculator subtracts variable cost per unit from price per unit to find contribution margin per unit.

It divides fixed costs by contribution margin. The result is the number of units needed before profit starts, assuming each unit has the same price and variable cost.

If price per unit is equal to or below variable cost per unit, each sale contributes nothing or loses money before fixed costs, so the calculator returns an error state.

Useful next steps

Break-even formula

breakEvenUnits = fixedCosts / (pricePerUnit - variableCostPerUnit)

Break-even units depends on contribution margin, not gross margin alone. Contribution margin per unit is price per unit minus variable cost per unit.

  • fixedCosts are costs that do not vary directly with units sold.
  • pricePerUnit is sale price per unit.
  • variableCostPerUnit is cost that scales with each unit.

What the Numbers Mean

Fixed costs
Costs that must be covered regardless of unit volume, such as rent, salaries, software, insurance, or equipment leases.
Price per unit
The selling price for one unit, order, service package, or billable unit.
Variable cost per unit
The cost that increases with each unit sold, such as materials, direct labor, packaging, or transaction fees.
Contribution margin
Price per unit minus variable cost per unit. This is the amount each sale contributes toward fixed costs.

Assumptions

  • Price per unit must be greater than variable cost per unit.
  • Fixed costs are treated as constant across the volume range being tested.
  • Price and variable cost per unit are assumed to stay the same for every unit.
  • Taxes, financing costs, refunds, capacity limits, and demand constraints are excluded unless reflected in the inputs.
  • For physical units, round break-even units up to the next whole unit.

Worked Examples

Small product launch

Input
$18,000 fixed costs, $60 price, $24 variable cost
Output
500 units

Contribution margin is 36 per unit, so 18,000 divided by 36 equals 500.

Service package

Input
$42,000 fixed costs, $250 price, $110 variable cost
Output
300 units

Each sale contributes 140 toward fixed costs, so 42,000 divided by 140 equals 300.

Low contribution margin

Input
$12,500 fixed costs, $35 price, $30 variable cost
Output
2,500 units

A 5 contribution margin requires much higher volume to cover fixed costs.

Frequently Asked Questions

Why does the calculator show an error when price is below variable cost?

Each sale would lose money before fixed costs, so selling more units cannot cover fixed costs.

Should I round break-even units up?

For physical units, yes. You generally need to sell the next whole unit to fully cover fixed costs.

Does this include taxes?

No. Add taxes only if they are part of the cost model you want to evaluate.

What fixed costs should I include?

Include costs that do not change directly with each unit, such as rent, salaries, subscriptions, equipment leases, insurance, and planned marketing spend.

What if variable cost changes at higher volume?

Run separate scenarios. Bulk discounts, overtime labor, shipping tiers, or capacity limits can change variable cost and make a single break-even point too simple.

When should I not use break-even units alone?

Do not rely on it alone when demand limits, capacity constraints, cash flow timing, or step-fixed costs are material.

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Disclaimer

This calculator simplifies break-even analysis and does not replace accounting, pricing, tax, or operational planning advice.