Breakeven Calculator
Calculate your Breakeven point in units and revenue. Determine when your business will start making a profit by analyzing fixed costs, variable costs, and selling price. Essential for business planning, pricing strategies, and financial analysis.
Rent, salaries, insurance, etc.
Materials, labor, shipping, etc.
Price you charge customers
See profit or loss at a specific sales volume
Table of Contents
What is Breakeven Analysis?
Breakeven analysis is a financial calculation that determines the point at which total revenue equals total costs — the point where your business neither makes a profit nor incurs a loss. It's one of the most important tools in business planning and financial analysis.
The Breakeven point tells you:
- How many units you need to sell to cover all costs
- How much revenue you need to reach profitability
- When your business will start making a profit
- The margin of safety — how far above Breakeven you are
Understanding your Breakeven point is essential for pricing strategies, business planning, and making informed financial decisions. It helps you set realistic sales targets and understand the financial health of your business.
Breakeven Formula
The Breakeven calculation uses three key components:
Key Components
- Fixed Costs: Costs that don't change with production volume (rent, salaries, insurance, etc.)
- Variable Cost Per Unit: Costs that vary with each unit produced (materials, labor, shipping, etc.)
- Selling Price Per Unit: The price you charge customers for each unit
Formulas
The amount each unit contributes to covering fixed costs and generating profit.
The number of units you need to sell to cover all costs.
The total revenue needed to reach the Breakeven point.
The percentage of each sale that contributes to covering fixed costs and profit.
Common Use Cases
- Business Planning: Determine if your business model is viable and set realistic sales targets.
- Pricing Strategies: Understand how pricing affects your Breakeven point and profitability.
- Product Launch: Calculate how many units you need to sell to make a new product profitable.
- Cost Management: Identify opportunities to reduce fixed or variable costs to lower your Breakeven point.
- Investment Decisions: Evaluate whether to invest in equipment, marketing, or other expenses by seeing how they affect your Breakeven point.
- Financial Forecasting: Project when your business will become profitable and plan cash flow accordingly.
- Loan Applications: Demonstrate to lenders that you understand your business financials and have a path to profitability.
- Scenario Analysis: Test different pricing, cost, or sales volume scenarios to see their impact on profitability.
How It Works
The Breakeven calculator uses your business's cost structure to determine the exact point where revenue equals costs:
- Enter Your Costs: Input your fixed costs (costs that don't change with sales volume) and variable cost per unit (costs that increase with each unit sold).
- Enter Your Price: Input the selling price per unit — the amount you charge customers.
- Calculate Contribution Margin: The calculator subtracts variable cost from selling price to determine how much each unit contributes to covering fixed costs.
- Calculate Breakeven Point: Divides fixed costs by contribution margin to find how many units you need to sell.
- Calculate Breakeven Revenue: Multiplies Breakeven units by selling price to find the revenue needed.
The calculator also shows your contribution margin ratio — the percentage of each sale that contributes to covering fixed costs and generating profit. A higher contribution margin ratio means you need to sell fewer units to break even.
You can also test different sales volumes to see your profit or loss at specific unit levels, helping you understand the financial impact of different sales scenarios.
Frequently Asked Questions
Fixed costs are expenses that remain constant regardless of how many units you produce or sell. Examples include rent, salaries, insurance, and equipment leases. These costs don't change with production volume.
Variable costs are expenses that change directly with the number of units produced or sold. Examples include raw materials, direct labor, shipping costs, and packaging. The more units you produce, the higher your total variable costs.
Contribution margin is the amount each unit contributes to covering fixed costs and generating profit. It's calculated as: Selling Price - Variable Cost Per Unit.
Contribution margin is important because it shows how much profit you make on each unit after covering variable costs. A higher contribution margin means you need to sell fewer units to break even and start making a profit.
If your selling price is less than your variable cost per unit, you'll lose money on every sale, and you'll never break even. This means your business model is not viable at the current pricing.
To fix this, you need to either: increase your selling price, reduce your variable costs, or both. The calculator will show an error if you enter a selling price that's less than or equal to your variable cost per unit.
The test sales volume feature lets you see your profit or loss at a specific number of units sold. Simply enter the number of units you want to test, and the calculator will show:
- Total revenue at that sales volume
- Total costs (fixed + variable)
- Profit or loss amount
This is useful for scenario planning and understanding how different sales volumes affect your profitability.
Contribution margin ratios vary by industry, but generally:
- 20-30%: Low margin (common in retail, grocery)
- 30-50%: Moderate margin (common in manufacturing, services)
- 50%+: High margin (common in software, consulting, luxury goods)
A higher contribution margin ratio is generally better because it means you need to sell fewer units to break even and have more flexibility in pricing and costs.
You should recalculate your Breakeven point whenever:
- Your fixed costs change (new rent, salary increases, etc.)
- Your variable costs change (material price changes, labor costs, etc.)
- You change your selling price
- You're planning a new product or service
- You're making significant business decisions
Regular Breakeven analysis helps you stay on top of your business's financial health and make informed decisions.
No. All calculations happen entirely in your browser. Your financial data is never sent to our servers, stored in a database, or saved anywhere. When you refresh or close the page, your inputs are cleared.