How to use the break-even calculator
- Enter your fixed costs for the period — costs that don’t change with sales volume, such as rent, salaries, software subscriptions and loan repayments.
- Enter the selling price per unit and the variable cost per unit — costs that rise with each sale, such as materials, packaging, shipping and marketplace fees.
- See how many units and how much revenue you need to break even. Add a target profit to see the sales needed to reach it, and your expected sales to see projected profit and margin of safety.
Break-even formulas
Contribution per unit = Price − Variable cost
Break-even units = Fixed costs ÷ Contribution per unit
Break-even revenue = Fixed costs ÷ Contribution margin ratio
Units for target profit = (Fixed costs + Target profit) ÷ Contribution per unit
Example: fixed costs of 50,000 per month, price 850 and variable cost 420 give a contribution of 430 per unit. Break-even = 50,000 ÷ 430 = 116.3, so you need to sell 117 units (about 98,840 in revenue) each month before making a profit.
Key terms
- Contribution margin is what each sale contributes towards fixed costs and then profit. A higher contribution margin means you break even sooner.
- Margin of safety is how far your expected sales are above break-even. A margin of safety of 40% means sales could fall by 40% before you make a loss.
- Fixed vs. variable: some costs are “semi-variable” (for example, electricity). Split them into a fixed base and a variable part for a better estimate.
Using break-even analysis
- Starting a business: check whether the sales volume you need is realistic for your market before investing.
- Pricing decisions: see how a price change affects the number of sales you need.
- Hiring or moving: new fixed costs raise your break-even point — calculate how many extra sales they require.
- Online selling: include marketplace fees and advertising in variable costs. Our Amazon FBA Calculator gives per-unit fees.
Ways to lower your break-even point
- Reduce fixed costs — renegotiate rent, cut unused subscriptions.
- Lower variable costs — buy materials in bulk, optimise packaging and shipping.
- Raise prices or add higher-margin products to the mix.
Frequently asked questions
What is the break-even point?
The sales volume at which total revenue equals total costs, so profit is zero. Every sale above it adds profit.
How do I calculate break-even in units?
Divide fixed costs by the contribution per unit (price minus variable cost per unit), and round up.
What if my price is lower than my variable cost?
Then each sale loses money and you can never break even. You need to raise the price or reduce variable costs.
Can I use any currency?
Yes. The calculation is the same in taka, dollars, rupees or any currency.