Break-even calculator

How many sales before a product or business starts making money?

Formula Finance

Units to sell

Exact break-even units: 500
Break-even revenue: US$22,500.00
Contribution per unit: US$24.00
Contribution margin ratio: ≈ 53.3333%

How it works

Each unit sold contributes its price minus its variable cost towards fixed costs such as rent and salaries. Divide the fixed costs by that contribution to get the break-even point.

Add a target profit to find the sales needed to earn it. The units figure is rounded up to a whole unit; the exact figure and revenue are not rounded.

Formula

Contribution = price − variable cost
Units = (fixed costs + target profit) ÷ contribution
Revenue = units × price

Worked example

With fixed costs of 12,000, a price of 45 and a variable cost of 21, each unit contributes 24. Break-even is 12,000 ÷ 24 = 500 units, or 22,500 of revenue. The contribution margin ratio is 24 ÷ 45 ≈ 53.33%.

Questions people ask

What counts as a fixed cost?

Costs that do not change with the number of units in the period, such as rent, insurance and salaried staff. Materials and per-sale fees are variable.

What period should the fixed costs cover?

Any period you like, such as a month or a year. The break-even units are then the sales needed in that same period.