Break-Even Point Calculator
Determine exactly how many units you need to sell to cover your costs.
Rent, salaries, software, insurance.
What the customer pays per unit.
Materials, shipping, commissions.
Set to 0 for true break-even.
Analysis Results
Contribution Margin:
$0.00
Contribution Margin Ratio:
0%
Break-Even Units:
0 Units
Break-Even Sales Revenue:
$0.00
Units for Target Profit:
0 Units
What is a Break-Even Point?
In business, the break-even point is the specific moment where your total revenue equals your total expenses. At this stage, your business is making exactly zero profit, but it is also not incurring any losses. It is the critical milestone every startup strives to reach as quickly as possible.
How to Calculate Your Break-Even Point
The formula for break-even point in units is straightforward:
Break-Even Units = Total Fixed Costs / (Price per Unit – Variable Cost per Unit)
The denominator (Price minus Variable Cost) is known as your Contribution Margin. This is the amount of money each sale contributes toward covering your fixed overhead expenses.
Realistic Example:
Imagine you run a specialty candle business.
Imagine you run a specialty candle business.
- Fixed Costs: $2,000/month (Rent, Marketing, Website).
- Sales Price: $25 per candle.
- Variable Cost: $10 per candle (Wax, jar, shipping).
- Contribution Margin: $25 – $10 = $15.
- Break-Even: $2,000 / $15 = 133.33. You must sell 134 candles to break even.
Why This Metric Matters for SEO and Growth
Understanding your break-even point allows you to perform "What-If" analysis. If you lower your price to attract more customers, how many more units must you sell to remain profitable? If you invest in more efficient manufacturing that lowers your variable costs, how much faster will you reach profitability?
Key Components of the Calculation
- Fixed Costs: These are expenses that don't change regardless of how much you sell. Examples include rent, insurance, and administrative salaries.
- Variable Costs: These costs scale directly with production. If you sell more, these costs go up. Examples include raw materials and packaging.
- Unit Price: The average price at which you sell a single unit of your product or service.