Break-Even Calculator
Find your break-even point in units and revenue
How Break-Even Analysis Works
Break-even analysis determines the point at which total revenue equals total costs. Below this point, your business loses money. Above it, every unit sold generates profit.
Fixed vs Variable Costs
The Break-Even Formula
Break-Even Units = Fixed Costs / (Price - Variable Cost per Unit)
The denominator (Price - Variable Cost) is called the contribution margin — it represents how much each unit contributes toward covering your fixed costs.
Written by Finance Experts · Last updated September 2026
Frequently Asked Questions
What is a break-even point?
The break-even point is where your total revenue equals your total costs — you make zero profit but also zero loss. Every sale beyond this point generates profit equal to your contribution margin.
How do I lower my break-even point?
Three strategies: (1) Reduce fixed costs (renegotiate rent, cut subscriptions), (2) Lower variable costs per unit (bulk purchasing, efficiency improvements), or (3) Increase price (add value, reposition product).
What is a good contribution margin?
Contribution margins vary by industry. Software companies often have 70-90% margins. Retail typically has 25-50%. Manufacturing might have 30-50%. Higher margins mean a lower break-even point and faster path to profitability.
How often should I recalculate break-even?
Recalculate whenever your costs or pricing change — typically quarterly. If you raise prices, add new fixed costs (like hiring), or see changes in material costs, update your break-even analysis immediately.
Is break-even analysis the same as profit analysis?
No. Break-even shows when you stop losing money. Profit analysis shows how much you earn above break-even. A business can be past break-even but still not meeting its profit goals. Always consider your target profit alongside break-even.
What is margin of safety?
Margin of safety = (Actual Sales - Break-Even Sales) / Actual Sales. It shows how much sales can drop before you start losing money. A 30% margin of safety means sales can fall 30% before you hit break-even. Higher is better.
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Data Sources & Citations
- OfficialInternal Revenue Service (IRS)
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