Break Even Calculator

Calculate your break even point in units and revenue. Determine how many units you need to sell to cover fixed and variable costs, visualize profit zones, and plan target profit scenarios.

$
10K
$
5
$
800
units
0
$
Break Even Point
500units
$12,500 in revenue
Contribution Margin
$20
80.0% of price per unit
Profit at 800 units
$6,000
300 units above break even

Cost Structure

Fixed vs variable cost split at break even point

Fixed Costs
$10,000
80%
Variable Costs
$2,500
20%

What is Break Even Analysis?

Understanding the fundamentals of break even point calculation

Break even analysis determines the point at which your total revenue equals your total costs — meaning you neither make a profit nor incur a loss. The break even point (BEP) tells you exactly how many units you need to sell or how much revenue you need to generate to cover all your fixed and variable expenses.

This is essential for startups, product launches, pricing decisions, and understanding the minimum sales volume needed for a business to be viable.

Break Even Formulas

Key formulas used to calculate the break even point

Break Even Point (in Units)

BEP (units) = Fixed Costs / (Price per Unit - Variable Cost per Unit)

Break Even Point (in Revenue)

BEP (revenue) = Fixed Costs / Contribution Margin Ratio

Contribution Margin

Contribution Margin = Price per Unit - Variable Cost per Unit

Units for Target Profit

Units = (Fixed Costs + Target Profit) / Contribution Margin

Fixed Costs vs. Variable Costs

Understanding the two types of costs in break even analysis

Fixed Costs

Costs that remain constant regardless of how many units you produce or sell.

  • Rent and lease payments
  • Salaries of permanent staff
  • Insurance premiums
  • Equipment depreciation
  • Loan payments

Variable Costs

Costs that change proportionally with the number of units produced or sold.

  • Raw materials
  • Direct labor (per unit)
  • Packaging and shipping
  • Sales commissions
  • Transaction fees

Break Even Example

A practical example of break even analysis for a small business

Imagine you run a candle-making business with the following costs:

Inputs

  • Fixed Costs: $2,000/month
  • Variable Cost per Candle: $4
  • Selling Price per Candle: $14

Outputs

  • Contribution Margin: $10/candle
  • Break Even: 200 candles/month
  • Revenue at BEP: $2,800
  • Profit per unit beyond BEP: $10

You need to sell at least 200 candles ($2,800 in revenue) each month to cover all costs. Every candle sold beyond 200 generates $10 in profit.

Common Break Even Mistakes

Avoid these common errors when performing break even analysis

Forgetting hidden fixed costs

Include marketing budgets, software subscriptions, accounting fees, and other overhead.

Ignoring variable cost changes at scale

Bulk discounts can lower variable costs, but increased demand may raise shipping costs.

Using revenue instead of contribution margin

The BEP formula requires contribution margin (price minus variable cost), not just price.

Not accounting for taxes

Break even analysis typically shows pre-tax break even. Factor in tax obligations for a complete picture.

Assuming a single product

For multiple products, use a weighted average contribution margin based on your expected sales mix.

Frequently Asked Questions

Common questions about break even analysis and calculation

More Business calculators