— Business & Valuation
Break-even Calculator
Find the units and revenue needed to cover fixed and variable costs. Add a profit target, tax rate, current sales, or product mix to see break-even, margin of safety, profit, and the CVP chart.
Break-even units
1,250
- Break-even revenue
- $125,000
- Contribution margin / unit
- $40
- Contribution margin ratio
- 40%
- Margin of safety
- 30.56%
- Profit at current sales
- $22,000
Try: Basic break-even, Hit a profit target, Startup runway, Thin margin (lower price)
— The volume scenario table
| Units | Revenue | Variable cost | Contribution | Fixed cost | Profit / (loss) |
|---|---|---|---|---|---|
| 0 | $0 | $0 | $0 | $50,000 | $-50,000 |
| 312.5 | $31,250 | $18,750 | $12,500 | $50,000 | $-37,500 |
| 625 | $62,500 | $37,500 | $25,000 | $50,000 | $-25,000 |
| 937.5 | $93,750 | $56,250 | $37,500 | $50,000 | $-12,500 |
| 1,250 | $125,000 | $75,000 | $50,000 | $50,000 | $0 |
| 1,562.5 | $156,250 | $93,750 | $62,500 | $50,000 | $12,500 |
| 1,800 | $180,000 | $108,000 | $72,000 | $50,000 | $22,000 |
| 1,875 | $187,500 | $112,500 | $75,000 | $50,000 | $25,000 |
| 2,187.5 | $218,750 | $131,250 | $87,500 | $50,000 | $37,500 |
| 2,500 | $250,000 | $150,000 | $100,000 | $50,000 | $50,000 |
— The break-even, visualized
Download— How it works
Contribution margin per unit = Price − Variable cost. Break-even units = Fixed costs ÷ contribution margin. Break-even revenue = Fixed costs ÷ contribution-margin ratio. Target-profit units = (Fixed costs + Target profit) ÷ contribution margin. Margin of safety = (Actual − Break-even) ÷ Actual sales.
Contribution margin: the engine of break-even
Break-even rests on one idea — the contribution margin. Each unit you sell brings in its price but costs its variable cost to make, so the difference contributes toward your fixed costs. Divide the fixed costs by that per-unit contribution and you get the number of units needed to cover them exactly: the break-even point, where profit is zero. Sell one more and you’re in profit; one fewer and you’re in loss. The contribution-margin ratio — contribution as a percentage of price — does the same in revenue terms, which is handy when you think in sales dollars rather than units. The lower your margin, the more you must sell to break even, which is why a small price cut can dramatically raise the break-even volume.
Worked example — fixed costs 50,000, price 100, variable cost 60: Contribution margin = 100 − 60 = 40 per unit (a 40% ratio). Break-even = 50,000 ÷ 40 = 1,250 units, or 125,000 in revenue. At 1,800 units you make 22,000 profit — a 30.6% margin of safety.
Beyond break-even: targets, safety and the mix
Break-even is the floor; usually you want a profit, not just survival. Add a target profit and the calculator solves for the volume to reach it — treating the target as the fixed costs plus the profit you want, divided by the contribution margin. If your target is a take-home (after-tax) figure, switch on the after-tax toggle and it grosses the target up by your tax rate first, because you must earn more pre-tax to keep that much. Once you have a current sales figure, two more numbers matter: the margin of safety — how far sales can fall before you hit break-even, your cushion against a downturn — and the actual profit or loss you’re running. And because real businesses sell a range of products, the product-mix mode computes a weighted-average contribution margin across them, so the break-even reflects your actual sales blend rather than one idealised product.
Reading the CVP chart
The cost-volume-profit chart is the most recognisable picture in business: a revenue line rising from the origin, a total-cost line starting at the fixed-cost level and rising more gently, and the point where they cross — the break-even. To the left, the cost line is above revenue: the loss zone. To the right, revenue pulls ahead: the profit zone, which widens with every unit. The gap between the lines at any volume is your profit or loss, and the steepness of the wedge shows how fast profit accumulates once you’re past break-even — a direct read on operating leverage. The companion profit-volume chart plots that profit line alone, crossing zero at the break-even point. Educational tool only — not financial advice; the model assumes price and unit costs stay constant, which real businesses should pressure-test.
— Reader questions
How do you calculate the break-even point?
Divide your fixed costs by the contribution margin per unit (price minus variable cost per unit). The result is the number of units you must sell to cover all costs exactly — zero profit. Multiply by the price (or divide fixed costs by the contribution-margin ratio) to get the break-even in revenue.
What is the contribution margin?
It’s the amount each unit sold contributes toward fixed costs and profit, after its own variable costs — price minus variable cost per unit. As a percentage of price it’s the contribution-margin ratio. It’s the heart of break-even analysis: the higher the contribution margin, the fewer units you need to sell to break even.
What is the margin of safety?
The margin of safety is how far your actual (or expected) sales sit above the break-even point, usually as a percentage: (actual sales − break-even sales) ÷ actual sales. It’s a cushion — it tells you how much sales could drop before you start losing money. A larger margin of safety means a more resilient business.
How do I find the sales needed for a target profit?
Add the target profit to your fixed costs, then divide by the contribution margin per unit: (fixed costs + target profit) ÷ contribution margin. If the target is an after-tax figure, gross it up by dividing by (1 − tax rate) first, since you must earn more before tax to keep that amount.
How does break-even work with multiple products?
You use a weighted-average contribution margin: weight each product’s contribution margin by its share of the sales mix, then divide total fixed costs by that blended margin. The result is the total break-even volume across the mix; each product’s share follows its mix percentage. Change the mix and the break-even changes, because higher-margin products pull it down.