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Break-Even Revenue Calculator

Enter fixed costs and the contribution margin ratio to find the break-even sales revenue.

How it is calculated

The break-even point in sales dollars is break-even revenue = fixed costs / (CM ratio % / 100). Fixed costs are the costs for the period that do not change with sales (rent, salaries, subscriptions), in dollars. The contribution margin ratio is entered as a percentage between 0 and 100 and equals (price − variable cost per unit) / price × 100. The tool shows the result in US dollars along with the fixed cost and ratio you entered. Fixed costs can be zero, but the ratio must be above 0 and at most 100. It uses a single blended ratio, so for a product mix you need to work out the weighted average first. The answer covers the same period as your fixed costs.

Worked example

A small shop has monthly fixed costs of $18,500. Each dollar of sales leaves 35 cents after variable costs, so the contribution margin ratio is 35%. Break-even revenue: 18,500 / 0.35 = $52,857.14 per month. At that sales level, 35% of $52,857.14 is $18,500, which exactly covers fixed costs. Every dollar of sales above that adds 35 cents of profit, and a month with $45,000 of sales loses about $2,750.

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Common mistakes

  • Typing the ratio as a decimal. Enter 35 for 35%; entering 0.35 means 0.35% and the result grows a hundredfold to $5,285,714.29.
  • Using the gross margin or the profit margin instead of the contribution margin. Contribution margin only deducts variable costs; salaries or rent must stay in fixed costs.
  • Mixing periods: annual fixed costs with a monthly sales target, or the other way round. The break-even revenue covers the period of the fixed costs you enter.
  • Putting part of the variable costs, such as card fees or shipping, into fixed costs. This overstates the break-even point, and leaving them out of the margin ratio understates it.

Sources

About this calculator

Break-even revenue is the sales level at which total contribution margin exactly covers fixed costs, leaving zero profit and zero loss: Break-even revenue = Fixed costs ÷ Contribution margin ratio, where the contribution margin ratio is the share of each sales dollar left over after variable costs (price minus variable cost, divided by price).

Financial analysts, small business owners, and startup founders use this figure to set realistic sales targets and to stress-test pricing decisions — since a lower contribution margin (from higher variable costs or discounting) pushes the break-even point higher, a business can look profitable on paper yet still be short of the revenue needed to cover its fixed overhead.

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Comments (1)

  • Editorial team

    Break-even revenue is only a threshold for the period your fixed costs cover. With 20,000 of monthly fixed costs and a 40 percent ratio you need 50,000 a month, about 1,666.67 per day over 30 days. It is also useful to compare it with your actual sales: if you sell 65,000, you sit about 23 percent above break-even. How do you estimate your ratio when you sell several products?

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