Find how many units you must sell to cover your costs or reach a profit target.
Quick answer
If each unit sells for $25 and costs $10 to make, every sale contributes $15. You need 334 units, or $8,350 of sales, to cover $5,000 of fixed costs.
| Selling price | Contribution per unit | Units to break even |
|---|---|---|
| $15 | $5 | 1000 |
| $20 | $10 | 500 |
| $25 | $15 | 334 |
| $30 | $20 | 250 |
| $40 | $30 | 167 |
These figures are computed with the same formulas as the Break Even Calculator above. Change the inputs in the tool to see your own result.
The Break-Even Calculator finds how many units you must sell, and how much revenue you need, to cover your costs. Enter fixed costs, the price per unit and the variable cost per unit; add an optional profit target to see the sales needed to reach it. A chart shows revenue crossing total cost at the break-even point, and a table shows profit or loss at different sales volumes.
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With $5,000 of fixed costs, a $25 price and $10 of variable cost per unit, each sale contributes $15 (a 60% contribution margin). Break-even is 5,000 ÷ 15 = 333.3, rounded up to 334 units, or $8,350 of revenue. To also earn $3,000 of profit you would need 534 units.
The model assumes a constant price and constant variable cost per unit, and that all fixed costs stay fixed at every volume. Real businesses see step costs, discounts and changing prices, so run the numbers at more than one price.
Accuracy: Formulas follow standard published methods and are checked against worked reference examples. Results are estimates based on the values you enter and do not replace advice from a qualified professional.
Expert Tip
Raising your price by a small amount often lowers break-even far more than cutting costs does, because it increases the contribution of every unit sold.
Your break-even point is the level of sales at which revenue exactly covers costs, so profit is zero. Below it you lose money; above it you profit. Knowing it turns a vague hope into a concrete target: how many units, or how much revenue, must I sell before this business or product pays for itself?
The formula is break-even units = fixed costs ÷ (price per unit − variable cost per unit). The denominator, price minus variable cost, is the contribution margin per unit: the amount each sale contributes towards covering fixed costs and, once they are covered, towards profit.
The whole calculation depends on classifying costs correctly.
A small shop has $5,000 of fixed costs a month, sells an item for $25 and pays $10 in variable costs. Each sale contributes $15, a 60 percent contribution margin. Break-even is 5,000 ÷ 15 = 333.3, so the shop needs 334 sales, or $8,350 of revenue. Every sale after that adds $15 of profit. To earn $3,000 of profit as well, the shop needs (5,000 + 3,000) ÷ 15 = 533.3, rounded up to 534 units.
The result is rounded up because you cannot sell a fraction of an item, and stopping at 333 would leave you short of covering your costs. The chart shows revenue crossing total cost at that volume, and the table shows the profit or loss at several sales levels around it.
The calculator is at its most useful when you change one number and watch the result. Compare three moves on the same shop.
If you expect to sell 500 units against a break-even point of 334, your margin of safety is 166 units, or about a third of your expected sales. A large margin of safety means you can absorb a bad month; a small one means the business is fragile. Use expected sales from real data, such as previous months or a pilot, not from hope. If you are unsure what price to test, the Discount Calculator shows how a sale price changes what each unit contributes.
Break-even analysis is useful when launching a product, hiring, opening a location or signing a lease. Compare it with the return on the same investment using the ROI Calculator and check that your price gives a healthy margin with the Profit Margin Calculator. Read how to calculate the break-even point for a longer treatment.
It assumes a constant price and variable cost per unit and that fixed costs stay fixed across all volumes. In practice you may need more staff or a bigger premises at higher volumes, suppliers may give discounts, and you may sell several products with different margins. For a business with multiple products, calculate an average contribution margin weighted by the sales mix, or run each product separately. Nothing you enter is sent or stored.
The break-even formula, fixed and variable costs, contribution margin, and how a price change or a cost cut moves the number of sales you need.
Learn the ROI formula, how to annualize a return, what to count as cost, and how ROI applies to stocks, property and marketing, with worked examples.
Margin and markup are not the same. Learn both formulas, how to convert between them, and how to set prices that really earn the profit you planned.
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