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Understand your business profitability with our break-even calculator. Determine exactly how many units you need to sell or how much revenue you need to generate to cover all costs and start making profit.
Rent, salaries, insurance, etc. (costs that don't change with production)
Materials, labor, packaging per unit (costs that change with production)
Selling price per unit
Calculate units needed to achieve specific profit goal
Break-Even Units = Fixed Costs / (Price - Variable Cost)
At the break-even point, total revenue equals total costs (fixed + variable), resulting in zero profit or loss.
Units to Sell:
1,667
Revenue Needed:
$83,350
Contribution margin is the amount each unit contributes to covering fixed costs and profit.
50% of Break-Even
833 units
-$25,010
-60.0% margin
75% of Break-Even
1,250 units
-$12,500
-20.0% margin
Break-Even Point
1,667 units
+$10
0.0% margin
125% of Break-Even
2,084 units
+$12,520
12.0% margin
150% of Break-Even
2,501 units
+$25,030
20.0% margin
200% of Break-Even
3,334 units
+$50,020
30.0% margin
The break-even point is the moment when total revenue equals total costs—you're no longer losing money but haven't yet made profit. Understanding your break-even point is crucial for new businesses, product launches, or service offerings. It answers the critical question: "How many units must I sell to cover all costs?"
Our calculator distinguishes between fixed costs (rent, salaries, insurance, equipment—costs that don't change with production volume) and variable costs (materials, commissions, shipping—costs that increase per unit sold). The break-even formula is: Fixed Costs / (Price per Unit - Variable Cost per Unit). This gives you the exact number of units needed to break even.
Break-even analysis informs pricing strategy—higher prices mean fewer sales needed to break even but may reduce demand. It guides cost reduction efforts—reducing variable costs by $1 per unit might lower break-even by hundreds of units. It helps evaluate market viability—if break-even requires 10,000 monthly sales but total market size is 5,000 customers, the business isn't viable.
Use break-even analysis to set minimum sales targets, negotiate supplier pricing, evaluate expansion decisions, and determine when to pivot or persevere. Remember that break-even is survival, not success—you need to exceed break-even significantly to justify the risk and opportunity cost of your venture. Build in a margin of safety and plan for profit, not just covering costs.
You have four options: increase prices (test market acceptance), reduce variable costs (negotiate with suppliers, improve efficiency), reduce fixed costs (smaller space, automation), or reconsider the venture viability. Sometimes businesses aren't viable at current market conditions.
Break-even is survival—you're not making money or losing money. Real success requires significantly exceeding break-even to justify your time and risk. Plan to sell 2-3x break-even volume to build true profit margin and business sustainability.
For new businesses, many founders don't draw salary initially—this improves break-even math but isn't sustainable. Better: include a modest salary in fixed costs to ensure the business model can eventually support you. This provides realistic viability assessment.