Business Break-Even Point Calculator
Determine exactly how many units you need to sell to cover all costs and start making a profit.
Rent, salaries, insurance, etc.
Materials, labor, shipping per item.
Please ensure the Selling Price is higher than the Variable Cost.
Break-Even Units:
0
Break-Even Sales Revenue:
0
Contribution Margin per Unit:
0
Contribution Margin Ratio:
0%
What is the Break-Even Point?
The break-even point is the specific moment in your business operations where total costs and total revenue are exactly equal. At this stage, your business is not making a profit, but it is also not losing money. Every dollar earned after this point contributes directly to your net profit.
How to Use This Calculator
To get an accurate calculation, you need three key pieces of data:
- Fixed Costs: These are expenses that do not change regardless of how many units you sell (e.g., office rent, administrative salaries, software subscriptions).
- Selling Price: The amount of money you charge customers for a single unit of your product or service.
- Variable Costs: Expenses that fluctuate directly with production volume (e.g., raw materials, packaging, sales commissions).
Realistic Example:
Imagine you run a handmade candle business. Your monthly rent and utilities (Fixed Costs) are $1,200. You sell each candle for $25 (Selling Price). The wax, wick, and jar for one candle cost $10 (Variable Cost).
Using the formula: $1,200 / ($25 – $10) = 80 Candles.
You must sell 80 candles every month just to cover your expenses.
Imagine you run a handmade candle business. Your monthly rent and utilities (Fixed Costs) are $1,200. You sell each candle for $25 (Selling Price). The wax, wick, and jar for one candle cost $10 (Variable Cost).
Using the formula: $1,200 / ($25 – $10) = 80 Candles.
You must sell 80 candles every month just to cover your expenses.
Why is This Metric Important?
Understanding your break-even point is critical for several reasons:
- Pricing Strategy: If your break-even point is too high, you may need to increase your prices.
- Cost Control: It highlights whether your variable costs are eating too much of your margin.
- Feasibility: It helps you decide if a new business idea or product launch is realistically sustainable.
- Goal Setting: It provides a clear minimum target for your sales team.
The Break-Even Formula
The mathematical formula used by this calculator is:
Break-Even Units = Total Fixed Costs / (Price per Unit – Variable Cost per Unit)