Break Even Point Calculator
Find exactly how many units you must sell before you start making a profit. Fast, free, and private. Your numbers never leave this page.
Calculate your break even
Break even
Margin of safety
Profit and loss by volume
Monthly profit (revenue minus all costs) at volumes around your break even point.
What is the break even point, in plain English?
The break even point is the sales volume where your revenue exactly covers your costs. Sell one unit more than that, and every extra unit is profit. Sell one unit less, and you lose money on the month.
There are two kinds of costs. Fixed costs happen no matter what: rent, salaries, insurance. Variable costs happen per unit sold: materials, packaging, shipping. The difference between your price and your variable cost is the contribution margin. Each unit you sell contributes that amount toward covering your fixed costs.
So the math is simple. Divide your fixed costs by the contribution margin per unit, and you get the number of units you must sell to break even. Multiply by your price, and you get the break even revenue.
The margin of safety tells you how much room you have. It compares your expected sales to your break even sales. If your expected sales are 800 units and your break even is 417, your margin of safety is 383 units, or about 48 percent. That is how far sales can fall before you start losing money.
The formulas
- Contribution margin = price per unit minus variable cost per unit
- Break even units = fixed costs / contribution margin
- Break even revenue = break even units times price per unit
- Margin of safety = (expected sales minus break even sales) / expected sales
Example: fixed costs $5,000, variable cost $8 per unit, price $20 per unit. Contribution margin = $12. Break even units = 5,000 / 12 = 416.67. Break even revenue = 416.67 x $20 = $8,333.33.