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Break-Even Calculator

Find your break-even point in units and revenue

Business Costs
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Break-Even (Units)
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Break-Even Revenue--
Contribution Margin--
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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

Cost TypeExamplesBehavior
Fixed CostsRent, salaries, insurance, loan paymentsStay the same regardless of sales volume
Variable CostsRaw materials, shipping, commissions, packagingIncrease proportionally with each unit sold

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

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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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Write-offs every small business owner should know.

Key Business Metrics Every Entrepreneur Should Know

Gross Profit Margin: (Revenue - Cost of Goods Sold) / Revenue. Healthy: 50-70% for services, 25-35% for retail.
Net Profit Margin: Net Income / Revenue. Healthy: 10-20% for most industries.
Break-Even Point: When revenue equals total costs. Below this, you lose money. Above it, you profit.
Customer Acquisition Cost (CAC): Total sales and marketing spend / new customers acquired. Should be recovered within 12 months.
Lifetime Value (LTV): Average revenue per customer over their lifetime. Healthy businesses have LTV:CAC ratio of 3:1 or higher.
RK
Robert Kim PhD
Labor Economics · Last reviewed: September 2026

Data Sources & Citations

Disclaimer: Calculators and tools on this site are for informational purposes only and do not constitute financial, tax, legal, medical, or investment advice. Results are estimates and may not reflect actual rates or terms. Consult a qualified professional before making decisions. Privacy Policy

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Important: These are informational estimates, not financial, investment, tax or legal advice. Run your own numbers with a licensed professional before acting.
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