Break-Even Calculator

Used to calculate margin of safety
Finance Updated 16 Jun 2026

Calculate your break-even point, contribution margin, and margin of safety. Enter fixed costs, variable cost per unit, selling price, and an optional target revenue to see how many units you must sell to cover costs.

Formula

CM = Selling Price − Variable Cost; Break-Even Units = Fixed Costs ÷ CM
  • Contribution margin (CM) is what each unit contributes toward fixed costs after covering its own variable cost.
  • Break-even units = fixed costs ÷ contribution margin; break-even revenue is those units times the selling price.
  • The contribution margin ratio (CM ÷ price) shows what share of each sale is available to cover fixed costs and profit.
  • Margin of safety is how far your target revenue sits above break-even — a buffer before you start making a loss.

$500,000 fixed, $200 variable, $350 price

Inputs
  • Total Fixed Costs: 500000
  • Variable Cost per Unit: 200
  • Selling Price per Unit: 350
  • Target Revenue (optional): 700000

Contribution margin = 350 − 200 = $150. Break-even = 500,000 ÷ 150 ≈ 3,334 units (≈ $1.17M revenue), so a $700,000 target is still below break-even here.

Frequently asked questions

What is the break-even point?
It's the number of units (or amount of revenue) at which total income exactly equals total costs — no profit, no loss.
What is the margin of safety?
It's the gap between your expected (or target) revenue and your break-even revenue, showing how much sales can drop before you make a loss.
What is the contribution margin ratio?
It's the contribution margin divided by the selling price, expressed as a percentage — the portion of each sale left to cover fixed costs and profit.
Why must selling price exceed variable cost?
If it doesn't, each unit has a negative contribution margin and the business can never cover its fixed costs.

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