Break-Even Calculator

Break-even analysis determines the exact sales volume at which total revenue equals total costs, producing zero profit and zero loss. The core formula is: Break-even units = Fixed costs ÷ Contribution margin per unit. The contribution margin per unit equals the selling price minus the variable cost per unit—this represents how much each sale contributes toward covering fixed overheads.

Fixed costs are expenses that remain constant regardless of output—rent, salaries, insurance, loan repayments. Variable costs change in direct proportion to production volume—raw materials, packaging, direct labour, shipping per unit. Accurately separating these two categories is critical; misclassifying a variable cost as fixed will skew your break-even point significantly.

Beyond the unit-based break-even, the revenue-based break-even equals Fixed costs ÷ Contribution margin ratio, where the ratio is (Selling price − Variable cost) ÷ Selling price. This is useful for businesses selling multiple products at varying prices. Sensitivity analysis—adjusting price, costs, or volume—reveals how fragile or robust your margin is against market changes.