Free break-even analysis calculator
Enter your fixed costs, selling price, and variable cost per unit — this break-even calculator shows the units and revenue needed to cover costs before turning a profit, updated live, as you type.
On this page10 sections
Does not include taxes, depreciation, or opportunity cost. Real-world break-even analysis should include all overhead costs.
Results are estimates. Consult a professional.
How the break-even calculator works
Break-even analysis identifies the sales volume at which total revenue exactly equals total costs — the point where profit is zero and losses stop. Every unit sold above break-even generates profit equal to the contribution margin; every unit below it adds to the loss. The calculation rests on separating costs into two groups: fixed costs that don't change with volume, and variable costs that scale with every unit produced or sold.
If contribution margin is zero or negative — meaning variable cost equals or exceeds the selling price — the business cannot reach break-even at any sales volume. Every additional unit sold makes the loss larger, not smaller. This is the most critical output of break-even analysis: a negative contribution margin signals a fundamental pricing or cost problem, not a volume problem.
SCORE Association — free small business mentoring and financial education resources.Worked example: boutique candle business
A candle maker has $30,000/month in fixed costs (rent, salaries, equipment). Each candle sells for $50 with variable costs (wax, fragrance, jars, labels, shipping) of $20 per unit. How many candles must they sell each month to cover all costs?
Break-even units by fixed cost and contribution margin
Use this table to quickly estimate break-even volume. Find your monthly (or annual) fixed cost on the left, then read across to the column matching your contribution margin per unit. Lower contribution margins require proportionally more volume to cover fixed costs.
| Fixed Costs | CM $5/unit | CM $10/unit | CM $20/unit | CM $50/unit |
|---|---|---|---|---|
| $10,000 | 2,000 units | 1,000 units | 500 units | 200 units |
| $25,000 | 5,000 units | 2,500 units | 1,250 units | 500 units |
| $50,000 | 10,000 units | 5,000 units | 2,500 units | 1,000 units |
| $100,000 | 20,000 units | 10,000 units | 5,000 units | 2,000 units |
CM = Contribution Margin per unit (price minus variable cost). Source: Corporate Finance Institute break-even methodology.
Tips for using break-even analysis
Break-even is a planning tool, not a target. Your actual goal is to sell significantly above break-even. A safety margin below 10–15% means one bad month could tip the business into loss. Use break-even as a minimum threshold and set realistic sales targets above it.
- Separate fixed from variable costs carefully — Many costs are semi-variable (utilities, delivery, part-time staff). Classify them by asking: 'Does this cost change if I sell zero units?' If yes, it's variable; if no, it's fixed. Misclassifying costs produces an inaccurate break-even point.
- Run multiple scenarios — Calculate break-even at your current price, 10% higher, and 10% lower. A small price increase dramatically lowers break-even units (since contribution margin improves); a small price cut can nearly double required volume.
- Track contribution margin, not just revenue — A product with high revenue but a thin contribution margin (e.g., 5%) may be dragging the whole business below break-even. Know the CM% for each product or service line.
- Revisit after any major cost change — Adding an employee, signing a new lease, or switching suppliers changes your fixed or variable cost structure. Recalculate break-even whenever costs shift significantly.
- Use it before launching — Before starting a business or new product line, validate that the required break-even volume is achievable in your market. If you need 10,000 units/month but the market size is 5,000, the model doesn't work at current pricing.
Accuracy and limitations
Break-even analysis assumes a single, constant selling price and constant variable cost per unit. It does not model volume discounts, tiered pricing, mixed product lines (multi-product break-even requires weighted-average contribution margins), or economies of scale where variable costs fall as volume increases. It also assumes all units produced are sold — unsold inventory effectively increases fixed cost per unit.
Not tax or financial advice. Break-even analysis is a simplification of business economics and should be used as a directional planning tool alongside a full cash flow forecast and profit-and-loss projection. Consult an accountant or financial advisor before making major pricing, hiring, or investment decisions based on break-even calculations alone.
Break-even terms defined
About this break-even calculator
This calculator runs entirely in your browser — nothing you enter is sent to any server.
Browse more in our business calculators, or explore the complete library on the free calculators page.