Free Break-Even Calculator
Know your numbers. Calculate the exact point where your revenue covers all costs, helping you set sales targets and pricing strategies.
Last Updated: 15 Jan 2026
Business Costs
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What is a Break-Even Point?
The break-even point is the level of sales where total revenue exactly equals total costs—neither profit nor loss. It's a critical metric for business planning, pricing strategy, and financial forecasting. Understanding your break-even point helps you set realistic sales targets, determine minimum pricing, and assess business viability.
Calculating break-even is essential for startups, small businesses, and entrepreneurs who need to understand the minimum performance required to cover costs. It helps answer questions like: "How many units do I need to sell?" or "What price should I charge?"
Why Use Our Free Break-Even Calculator?
Instant Calculations
Calculate break-even points instantly as you adjust costs and prices. No complex spreadsheets needed—get results immediately.
Business Planning
Essential for creating business plans, securing funding, and making informed decisions about pricing and production targets.
Pricing Strategy
Determine minimum pricing to cover costs and understand how price changes affect your break-even point and profitability.
Common Use Cases for Break-Even Analysis
Business Planning
Startup Planning
Determine if your business idea is viable by calculating how many units you need to sell to cover startup costs and operating expenses.
Pricing Decisions
Set minimum prices that cover costs and help you understand the impact of price changes on profitability and sales targets.
Sales Targets
Set realistic sales goals based on your break-even point, helping you plan marketing efforts and resource allocation.
Financial Analysis
Cost Management
Understand how reducing fixed or variable costs affects your break-even point, helping you optimize operations and improve profitability.
Investment Decisions
Evaluate new products, services, or business opportunities by calculating break-even points and assessing financial viability.
Loan Applications
Demonstrate to lenders that you understand your business economics and have realistic financial projections based on break-even analysis.
How Break-Even Calculation Works
Calculate Contribution Margin
Contribution Margin = Selling Price - Variable Cost per Unit. This is the amount from each sale that contributes to covering fixed costs.
Calculate Break-Even Units
Break-Even Units = Fixed Costs ÷ Contribution Margin. This tells you exactly how many units you need to sell to cover all costs.
Calculate Break-Even Revenue
Break-Even Revenue = Break-Even Units × Selling Price. This shows the total sales revenue needed to break even.
Understanding the Components
Fixed Costs
Expenses that don't change with production volume:
- Rent and utilities
- Salaries (fixed employees)
- Insurance and licenses
- Loan payments
- Marketing (fixed campaigns)
Variable Costs
Costs that change with each unit produced:
- Raw materials
- Packaging and shipping
- Direct labor (per unit)
- Sales commissions
- Payment processing fees
Contribution Margin
Price - Variable CostThe amount from each sale that contributes to paying off fixed costs. Higher contribution margin means fewer units needed to break even.
Break-Even Units
Fixed Costs / Contribution MarginThe specific number of items you need to sell to reach $0 profit. Every sale beyond this point generates profit.
Frequently Asked Questions
What is a Break-Even Point?
The break-even point is the level of sales where total revenue equals total costs. At this point, your business is neither making a profit nor a loss.
What if my contribution margin is negative?
A negative contribution margin means your variable costs exceed your selling price. You'll never break even—you lose money on every sale. You must either increase prices or reduce variable costs.
How do I reduce my break-even point?
You can reduce break-even by: (1) Lowering fixed costs, (2) Reducing variable costs per unit, (3) Increasing selling price, or (4) A combination of these strategies.
Does break-even include taxes?
Our calculator shows break-even before taxes. For after-tax break-even, you'd need to account for income tax on profits, which adds complexity to the calculation.
Can I use this for service businesses?
Yes! For services, 'units' might be hours billed, clients served, or projects completed. Variable costs could include materials, subcontractors, or commissions per service.
What are Fixed Costs?
Fixed costs are expenses that do not change with the amount of goods produced, such as rent, insurance, and salaries.
What are Variable Costs?
Variable costs change directly with the volume of production, such as raw materials, packaging, and direct labor per unit.
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