Free Break-Even Calculator: Units and Sales to Break Even
Find out how many units you need to sell, and how much revenue you need, to cover your fixed costs, plus the sales it takes to reach a profit goal. With the formula, worked examples and ways to lower your break-even point.
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The break-even point is the sales level where your revenue exactly covers your costs: below it you lose money, above it you make a profit. This free break-even calculator shows how many units you need to sell each month, the revenue that takes and how many more sales reach your profit goal. It works for products and, with hours as units, for services.
Break-even calculator
Use the same period for fixed costs and target profit, for example one month. Units are rounded up, because you cannot sell part of a unit. Taxes are not included.
Key takeaways
- With $5,000 of fixed costs a month, a $50 price and $30 of variable cost per unit, each sale contributes $20, so you break even at 250 units, or $12,500 in sales.
- To make $2,000 a month on top, you need 350 units, or $17,500 in sales.
- Raising the price to $55 lowers the break-even point to 200 units, because each sale then contributes $25.
The break-even formula
Break-even point (units) = fixed costs ÷ (price per unit − variable cost per unit)
The difference between price and variable cost is the contribution margin: what each sale contributes toward your fixed costs. Divided by the price, it is the contribution margin ratio, and the break-even point in dollars is:
Break-even sales = fixed costs ÷ contribution margin ratio
In the example, $50 − $30 = $20 per unit, a 40% ratio. $5,000 ÷ $20 = 250 units, and $5,000 ÷ 0.40 = $12,500 of sales. For a profit goal, add it to the fixed costs: ($5,000 + $2,000) ÷ $20 = 350 units.
Profit or loss at different sales volumes
| Units sold | Sales | Contribution | Profit or loss |
|---|---|---|---|
| 100 | $5,000 | $2,000 | −$3,000 |
| 200 | $10,000 | $4,000 | −$1,000 |
| 250 | $12,500 | $5,000 | $0 |
| 300 | $15,000 | $6,000 | $1,000 |
| 400 | $20,000 | $8,000 | $3,000 |
Once you pass the break-even point, every extra unit adds its full $20 contribution to profit.
Fixed costs vs. variable costs
| Fixed costs (per month) | Variable costs (per unit) |
|---|---|
| Rent and utilities | Materials and products you buy for resale |
| Salaries and your own pay | Packaging and shipping |
| Insurance and software subscriptions | Payment processing and marketplace fees |
| Loan payments and equipment leases | Sales commissions and per-order labor |
| Marketing you pay regardless of sales | Hourly contractors for each job |
The U.S. Small Business Administration defines fixed costs as costs for a period that do not change with how much you produce or sell. If a cost rises with each sale, treat it as variable.
Break-even for a service business
Use hours or projects as units. A consultant with $3,000 of fixed costs a month, a rate of $80 an hour and $5 of variable cost per billable hour (for example software billed per use) breaks even at $3,000 ÷ $75 = 40 billable hours a month. To find a rate that covers your own income as well, use the freelance hourly rate calculator.
How to lower your break-even point
- Raise prices: even a small increase goes straight to the contribution margin. See the profit margin calculator.
- Cut variable costs: buy in larger quantities, renegotiate shipping or reduce fees.
- Cut fixed costs: cancel unused subscriptions or share space and equipment.
- Sell more of your best products: items with a higher contribution margin reach break-even faster.
Limits of a break-even analysis
The calculation assumes one price and one variable cost per unit. With several products, use a weighted average contribution margin based on your sales mix. Prices, costs and demand also change: if you lower prices to sell more, the break-even point rises. And break-even is about profit, not cash: loan principal, inventory purchases and slow-paying customers can drain cash even when you are profitable.
Frequently asked questions
How do I calculate the break-even point?
Divide your fixed costs by the contribution margin per unit, which is the price minus the variable cost. $5,000 ÷ ($50 − $30) = 250 units.
What is a contribution margin?
The part of each sale that is left after variable costs, available to pay fixed costs and then to make a profit. At a $50 price and $30 variable cost, it is $20, or 40% of the price.
Why does the calculator round units up?
You cannot sell part of a unit. If the exact break-even point is 166.67 units, you need to sell 167 to cover your costs.
What if my variable cost is higher than my price?
Then every sale loses money and there is no break-even point. Raise the price or lower the variable cost before you try to grow sales.
Should I use monthly or yearly figures?
Either works, as long as fixed costs and the profit goal cover the same period. The result is then the number of units for that period.
