Break-Even Calculator
Find out exactly how many units you need to sell before your business stops losing money and starts making a profit. See it as a simple chart, not just a number.
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What break-even actually means
Your break-even point is the number of sales where your business has covered every cost, but hasn’t earned a profit yet. Sell less than this, and you lose money. Sell more, and every extra sale is pure profit.
Think of it like filling a bucket before it overflows. Fixed costs, like rent and salaries, fill the bucket first no matter how much or little you sell. Each sale adds a little water. Once the bucket is full, meaning your fixed costs are covered, every drop after that spills over as profit.
The formula only needs three numbers. Fixed costs stay the same every month. Price is what you charge per unit. Variable cost is what it costs you to make or deliver just one more unit. Subtract variable cost from price, and you get your contribution margin, the profit left over from each sale before fixed costs are covered.
Imagine you run a small coffee cart. Rent for your spot, plus your own wage, comes to $3,000 a month in fixed costs. Each coffee sells for $5, and the beans, milk, and cup cost you $1.50 per cup.
Your contribution margin is $5 − $1.50 = $3.50 per cup. Divide your fixed costs by that number: $3,000 ÷ $3.50 = 858 cups.
Sell your 858th cup this month, and you’ve covered every cost. Every cup after that is profit, minus the $1.50 it costs you to make it.
Why this number matters more than most owners think
Break-even isn’t just an accounting exercise. It tells you if a price is realistic, if a new product is worth launching, and how close your current sales are to actually being safe. A business selling well above its break-even point can absorb a slow month. One selling right at the line cannot.
It also shows you the fastest lever to pull when profit feels too thin. Raising your price by even a small amount lowers your break-even point faster than cutting costs usually can, because every sale after that change earns more from day one.
Common questions about break-even
Usually, yes. A lower break-even point means you need fewer sales before you start earning profit, which gives you more room to survive a slow season. It’s reached either by lower fixed costs, a higher price, or a lower cost per unit.
Fixed costs stay the same no matter how much you sell, like rent or a salaried employee. Variable costs rise and fall with sales, like raw materials or packaging. A cost is variable if selling one more unit makes that cost go up.
No, break-even only tells you where profit starts at zero. If you want a target profit on top of that, add your desired profit to your fixed costs before dividing by your contribution margin.
Yes. If rent goes up, a supplier raises prices, or you change what you charge customers, your break-even point moves too. It’s worth recalculating whenever a major cost or price changes.
Then you lose money on every single sale, and no sales volume can fix that. This means your contribution margin is negative, and the price or the cost needs to change before volume can help you.
Want to see how healthy that profit really is?
Check your margin against industry norms with the Profit Margin Calculator next.