Break-Even Analysis
Find the break-even point for a product or business — the number of units you must sell to cover all costs. Enter your fixed costs, variable cost per unit, and selling price to see break-even units and revenue.
Formula
Break-Even Units = Fixed Costs ÷ (Selling Price − Variable Cost)
- The difference between selling price and variable cost is the contribution margin — the amount each unit contributes toward fixed costs.
- Dividing fixed costs by the contribution margin gives the number of units needed to break even.
- Break-even revenue is simply those units multiplied by the selling price.
- Below the break-even point you make a loss; above it, each additional unit's contribution margin becomes profit.
$100,000 fixed, $50 variable, $150 price
Inputs
- Fixed Costs: 100000
- Variable Cost per Unit: 50
- Selling Price per Unit: 150
Contribution margin = 150 − 50 = $100. Break-even = 100,000 ÷ 100 = 1,000 units, or $150,000 in revenue.
Frequently asked questions
What is the break-even point?
It's the sales volume at which total revenue exactly covers total costs — no profit and no loss.
What is contribution margin?
It's the selling price minus the variable cost per unit, representing how much each sale contributes toward covering fixed costs.
Why must price exceed variable cost?
If the selling price is below the variable cost, every unit loses money and you can never break even no matter the volume.
How do I lower my break-even point?
Reduce fixed costs, cut variable costs, or raise the selling price — each increases the contribution margin or lowers the costs to recover.