Break-Even Calculator

Q: How do I calculate the break-even point?

Break-even units = fixed costs ÷ (price − variable cost per unit). If fixed costs are $10,000, price is $50, and variable cost is $30, you break even at 10,000 ÷ 20 = 500 units.

Q: What is contribution margin?

The price minus the variable cost per unit — the amount each sale contributes toward covering fixed costs and then profit. In the example above it is $20 per unit.

Q: How do I reach break-even faster?

Raise the price, cut variable cost per unit, or reduce fixed costs. Because break-even divides fixed costs by contribution margin, even a small price increase or cost cut can lower the units needed substantially.

The number every business owner needs: how many units — and how much revenue — it takes just to cover your costs before you make a dime of profit.

Break-even point

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Break-even revenue

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Contribution margin / unit

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Contribution margin ratio

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Units for target profit

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The break-even formula

Contribution margin = Price − Variable cost
Break-even units = Fixed costs ÷ Contribution margin
For a target profit: (Fixed costs + Target) ÷ Contribution margin

Worked example

Fixed $10,000, price $50, variable $30:

Contribution margin = $20/unit → break-even = 10,000 ÷ 20 = 500 units = $25,000 in revenue.

Want $6,000 profit? (10,000 + 6,000) ÷ 20 = 800 units.

Using break-even to make decisions

Break-even turns pricing and cost questions into concrete unit targets. A price increase from $50 to $55 lifts the contribution margin to $25 and drops break-even to 400 units — a 20% reduction from a 10% price bump, because fixed costs spread over a bigger margin. That leverage is why cutting variable cost or nudging price often beats chasing volume. Pair this with the margin calculator for pricing and the markup calculator for cost-plus targets; for a solo operation, factor self-employment tax into the profit you actually keep.

Frequently asked questions

How do I calculate the break-even point?

Fixed costs ÷ (price − variable cost). $10,000 ÷ ($50 − $30) = 500 units.

What is contribution margin?

Price minus variable cost per unit — what each sale contributes to fixed costs, then profit.

How do I reach break-even faster?

Raise price, cut variable cost, or lower fixed costs — each shrinks the units needed.

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Note: A simplified single-product model; real businesses have mixed products and semi-variable costs. Not financial advice. Last reviewed: July 2026.