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Break-Even Calculator · Break-Even Point in Units and Revenue

Your break-even point is the amount you must sell before the business stops losing money and starts making it. Below that number, your sales do not cover your costs; above it, every additional sale adds to profit. It is one of the first numbers to know before launching a product, opening a store, hiring an employee or changing a price, because it tells you how much sales volume the plan really needs.
The calculation separates two kinds of costs. Fixed costs, such as rent, salaries, insurance and software subscriptions, stay the same whether you sell ten units or ten thousand. Variable costs, such as materials, packaging, shipping, payment-processing fees and sales commissions, rise with every unit sold. What is left of each sale after its variable costs is the contribution margin, and it is the money that pays down the fixed costs first and becomes profit after that.
Enter your monthly fixed costs, your selling price and the variable cost of one unit. The calculator returns the break-even point in units and in revenue, and, if you add them, the units needed to reach a profit goal and your margin of safety, which is how far sales can fall before you start losing money. If your price does not cover the variable cost of a unit, the calculator warns you, because no volume of sales can fix that.
Rent, salaries, software, insurance: costs that do not change with sales
Standard: 50
Materials, packaging, shipping, payment fees and commissions per unit
Optional: units needed to earn this profit
Optional: shows your profit and margin of safety
Profit Goal:

Detailed Breakdown

6 metrics
PRIMARY RESULT
167
Break-Even Point (Units per Month)
Break-Even Revenue per Month
$8,333.33
Contribution Margin per Unit
$30.00
Contribution Margin Ratio
60.0%
Monthly Profit at 300 Units
$4,000.00
Margin of Safety
44.44%

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Calculation Formula

Standard Method

Contribution Margin per Unit = Selling Price − Variable Cost per Unit Contribution Margin Ratio = Contribution Margin ÷ Selling Price Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit Break-Even Revenue = Fixed Costs ÷ Contribution Margin Ratio Units for a Profit Goal = (Fixed Costs + Profit Goal) ÷ Contribution Margin per Unit Profit at Expected Sales = Expected Units × Contribution Margin per Unit − Fixed Costs Margin of Safety = (Expected Units − Break-Even Units) ÷ Expected Units × 100 Break-even units are rounded up to whole units, since you cannot sell part of a unit. The analysis assumes one product (or a stable product mix), a constant price and fixed costs that do not change within the period.

Benchmark Example:
A small shop has $5,000 of fixed costs per month (rent, software, insurance). It sells a product for $50 and each unit costs $20 in materials, packaging and fees: • Contribution margin: $50 − $20 = $30 per unit (60% of the price) • Break-even units: $5,000 ÷ $30 = 166.67, so 167 units per month • Break-even revenue: $5,000 ÷ 0.60 = $8,333.33 per month • Profit goal of $2,500: ($5,000 + $2,500) ÷ $30 = 250 units, or $12,500 in sales • If the shop expects to sell 300 units: profit = 300 × $30 − $5,000 = $4,000 per month, with a margin of safety of 44.4%

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Frequently Asked Questions

6 answers

Applicable Laws & Regulatory Standards

Internal Revenue Service & Federal Trade Commission

Official Legal Reference
Internal Revenue Code § 162(a) (Trade or Business Expenses)

Allows a deduction for the ordinary and necessary expenses of carrying on a trade or business, the category that fixed costs such as rent and salaries and variable costs such as materials fall into.

Treasury Regulation § 1.162-1(a) (Business Expenses)

Explains which operating expenses count as deductible business expenses, which helps classify costs correctly when separating fixed from variable costs.

FTC Guides Against Deceptive Pricing — 16 CFR Part 233

Sets the standards for truthful price claims and comparisons, relevant when a break-even analysis leads to a price change that will be advertised.

Legal citations and statutes are provided for consumer transparency, analytical validation, and educational reference under U.S. consumer financial regulations. This tool is not a substitute for formal legal, accounting, or tax counsel.

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exploreReal-World Scenarios

When to Use This Calculator

Everyday financial situations where this tool gives you fast, accurate clarity:

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Launching a Product or Business

Find out how many units or how much revenue you need each month before the idea stops losing money.

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Testing a Price Change

See how raising or lowering the price moves the break-even point and the volume you must reach.

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Deciding to Hire or Expand

Add a salary or a lease to the fixed costs and check how much extra sales it requires to pay for itself.

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Measuring Your Margin of Safety

Compare expected sales with break-even to learn how far sales can fall before you start losing money.

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