Break-Even Calculator

The break-even point is the number of units sold at which total revenue equals total costs. Below this point you are at a loss; above it you are profitable.

Fixed costs do not change with production volume. Examples include rent, salaries, insurance, and equipment depreciation.

Variable costs change directly with production volume. Examples include raw materials, packaging, direct labor per unit, and shipping per unit sold.

Contribution margin is the amount each unit sale contributes toward covering fixed costs and then generating profit. It equals selling price minus variable cost per unit.

If the selling price is at or below the variable cost, each unit sold increases your loss. The contribution margin must be positive to ever reach break-even.

You can lower the break-even point by reducing fixed costs, reducing variable costs per unit, or increasing the selling price — or a combination of all three.