Break-Even Point Calculator
Calculate units needed to cover costs, target profit, or profit at specific sales.
Rent, salaries, insurance, equipment
60.0% of each sale goes to fixed costs & profit
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What is Break-Even Point?
The Break-Even Point (BEP) is the moment when total revenue equals total costs—you're neither making a profit nor losing money. It's the first milestone for any business: the minimum sales needed to survive.
Our calculator offers 3 modes: find break-even units, calculate units for a target profit, or run what-if scenarios to see profit at specific sales volumes. Perfect for business planning, pricing decisions, and cost-volume-profit analysis.
Understanding your break-even point helps you set realistic sales targets and evaluate whether your business model is viable.
Break-Even Analysis
Find exact units and revenue needed to cover all costs.
Target Profit Mode
Calculate units needed for your desired profit.
What-If Scenarios
See profit/loss at any sales volume instantly.
Contribution Margin
See how much each sale contributes to profit.
Break-Even Formulas
Fixed Costs ÷ Contribution Margin
Break-Even Units × Selling Price
Selling Price - Variable Cost per Unit
(Fixed Costs + Profit) ÷ Contribution Margin
Fixed Costs (Don't Change)
Variable Costs (Per Unit)
Break-Even Strategy Tips
Lower fixed costs for faster break-even
Increase contribution margin by raising prices or cutting variable costs
Run BEP analysis before launching new products
Set sales targets above BEP to ensure profit
Monitor monthly as costs and prices change
Focus on high-margin products to hit BEP faster
Break-Even Limitations
Assumes all units sell at the same price (ignores discounts)
Ignores market demand (can you actually sell that many?)
Works best for single products (multi-product needs weighted analysis)
Semi-variable costs (utilities) are hard to classify
Frequently Asked Questions
What is break-even point?
Break-even point (BEP) is when total revenue equals total costs—no profit, no loss. It's the minimum sales needed to avoid losing money. Selling one more unit beyond BEP generates pure profit.
How do I calculate break-even point?
Break-Even Units = Fixed Costs ÷ (Selling Price - Variable Cost per Unit). The denominator is called 'Contribution Margin.' Example: $10,000 fixed costs, $50 price, $30 variable cost. BEP = 10,000 ÷ 20 = 500 units.
What is contribution margin?
Contribution Margin = Selling Price - Variable Cost per Unit. It's the amount each sale 'contributes' to covering fixed costs and profit. Higher contribution margin means faster break-even. Example: $50 price - $30 cost = $20 contribution margin.
What are fixed costs vs variable costs?
Fixed costs stay constant regardless of sales (rent, salaries, insurance). Variable costs change with each unit sold (materials, shipping, commissions). Semi-variable costs have both components (utilities with base + usage fees).
How do I calculate units needed for target profit?
Units for Target Profit = (Fixed Costs + Target Profit) ÷ Contribution Margin. Example: $10,000 fixed costs, $5,000 target profit, $20 contribution margin. Units = 15,000 ÷ 20 = 750 units needed.
Why is my break-even point too high?
High BEP indicates: 1) Too much fixed costs (reduce overhead). 2) Low selling price (consider price increase). 3) High variable costs (negotiate with suppliers). 4) Low contribution margin. Analyze each factor and adjust the weakest link.
What is contribution margin ratio?
Contribution Margin Ratio = Contribution Margin ÷ Selling Price × 100. Shows what percentage of each dollar goes toward fixed costs and profit. 40% ratio means $0.40 of every $1 sale covers fixed costs/profit. Higher ratio = better.
How does break-even analysis help pricing?
BEP analysis shows: 1) Minimum viable price to cover costs. 2) Impact of price changes on required sales. 3) How discounts affect profitability. 4) Whether a new product is viable. Use it BEFORE launching products or changing prices.
What are the limitations of break-even analysis?
Limitations: 1) Assumes constant prices (ignores bulk discounts). 2) Assumes costs are purely fixed or variable (ignores semi-variable). 3) Ignores market demand (you might not SELL that many). 4) Single product focus. Use alongside market research.
How do I lower my break-even point?
Lower BEP by: 1) Reduce fixed costs (negotiate rent, outsource). 2) Increase selling price (add value to justify). 3) Reduce variable costs (bulk purchasing, automation). 4) Change product mix to higher-margin items. Focus on contribution margin improvement.