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Break-Even Point Calculator

How many units do I need to sell to break even?

How it is calculated

The tool uses the contribution margin: margin = price − variable cost per unit. Break-even units are fixed costs / margin, rounded up to a whole unit because you cannot sell a fraction. Break-even revenue is the unrounded units times the price, and the margin ratio is margin / price × 100. Fixed costs are the total for the period (rent, salaries), price and variable cost are per unit. If the price does not exceed the variable cost, every sale loses money and the tool reports that no break-even exists.

Worked example

Fixed costs 12,000, selling price 25, variable cost 10 per unit. Margin: 25 − 10 = $15.00 per unit. Units: 12,000 / 15 = 800. Revenue: 800 × 25 = $20,000.00. Margin ratio: 15 / 25 = 60.00%. After 800 units you have covered all fixed costs, and each further unit adds 15 profit.

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Common mistakes

  • Putting the total cost per unit (which already includes a share of fixed cost) in the variable cost field. That counts fixed cost twice.
  • Mixing periods, such as monthly fixed costs with a yearly sales target.
  • Using a price that includes VAT. Enter the net price you actually keep.
  • Forgetting that costs like card fees or commissions rise with each sale and belong in variable cost.

Sources

About this calculator

This calculator finds the break-even point — the exact number of units you need to sell, and the revenue that represents, before a business starts making a profit. It works by comparing the selling price per unit against variable costs (which scale with each sale) and fixed costs (which stay the same regardless of volume), dividing total fixed costs by the contribution margin per unit to find where total revenue exactly equals total cost.

It is a core tool for anyone launching a product, pricing a new service, or evaluating whether a business idea is financially viable, since it turns abstract cost and pricing assumptions into a concrete sales target. Small business owners use it when setting prices or deciding whether a cost-cutting measure would lower the number of sales needed to stay afloat, and investors or lenders often ask for a break-even analysis before backing a new venture.

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Comments (1)

  • Editorial team

    The tool covers covering costs, but you can aim higher. To find the sales needed for a profit target, add that target to the fixed costs before entering them. With the guide's figures, fixed costs of 12,000 plus a 3,000 profit goal gives 15,000 divided by a 15 margin, so 1,000 units. Then ask whether the market and your capacity can really deliver that volume in the period. What profit target would you set for your product?

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