What is the Break-Even Point?

The break-even point is the moment where your total revenue equals your total costs. You aren't making a profit yet, but you aren't losing money either.

What are Fixed Costs?

Fixed costs are expenses that stay the same regardless of how much you sell. Examples include rent, insurance, software subscriptions, and salaried employees.

What are Variable Costs?

Variable costs increase with every unit you produce. Examples include raw materials, packaging, shipping fees, and sales commissions.

Why is my result 'Error'?

If your Variable Cost is higher than your Selling Price, you are losing money on every sale. You will never break even. You must raise your price or lower your costs.

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Break-Even Calculator

Find out exactly how many units you need to sell to start making a profit.

Fixed Costs ($)

Total monthly overhead

Variable Cost ($)

Cost per unit

Selling Price ($)

Revenue per unit

Understanding Break-Even Analysis

Every business owner asks the same question: "How much do I need to sell to survive?" The Break-Even Analysis answers this. It calculates the precise number of sales needed to cover all your costs.

Below the break-even point: You are losing money.
Above the break-even point: Every additional sale is pure profit.

The Formula

Break-Even Units = Fixed Costs ÷ (Price - Variable Cost)

The term (Price - Variable Cost) is known as the Contribution Margin. It represents how much money from each sale is left over to pay down your fixed costs.

Key Definitions

Fixed Costs (Overhead)

Expenses that you must pay even if you sell zero units.

Rent & Utilities
Salaries (Admin)
Insurance
Loan payments

Variable Costs (COGS)

Expenses that occur only when you produce or sell a unit.

Raw materials
Packaging
Credit card processing fees
Shipping

How to Lower Your Break-Even Point

A lower break-even point is better because it means less risk. You can achieve this by:

Raising Prices: Increases your margin per unit.
Lowering Variable Costs: Negotiate better rates with suppliers.
Cutting Fixed Costs: Reduce rent or overhead expenses.

Frequently Asked Questions

Does this include taxes? ▼

No. This is an operational break-even analysis. It calculates profit before tax. You should aim for a target profit above the break-even point to cover taxes.

What if I have multiple products? ▼

For multiple products, you should calculate the "Weighted Average Contribution Margin". Or, simpler: calculate the break-even point for each product individually by allocating a portion of the fixed costs to each.

Is my business data safe? ▼

Yes. We use client-side processing. Your costs and pricing strategies are never transmitted to us or stored in any database.