Break-Even Calculator
Find how many units you need to sell before a business covers its fixed costs.
Find how many units you need to sell before a business covers its fixed costs.
How Break-Even Calculator Works
Each unit sold contributes its "margin" — the selling price minus what it costs to actually produce that one unit — toward covering your fixed costs (rent, salaries, insurance, and anything else that doesn't change with sales volume). Dividing total fixed costs by that per-unit margin tells you exactly how many units you need to sell before the business stops losing money and starts turning a profit.
See It In Action
Who Uses Break-Even Calculator and Why
- Figuring out how many units a new product needs to sell before it starts generating profit, given its fixed costs and per-unit economics.
- Testing how a price increase or a reduction in variable cost per unit would shift the break-even point for an existing product.
- Deciding whether a planned sales volume is realistic given how many units are actually needed just to cover fixed costs.
- Sanity-checking a business plan's profitability assumptions before committing to a fixed cost like a lease or salaried hire.
Mistakes to Avoid
- Misclassifying a cost as fixed when it's actually variable (or vice versa) — since the formula divides fixed costs by the per-unit margin, getting this split wrong throws off the entire break-even figure, not just a small part of it.
- Forgetting to include all fixed costs (insurance, software subscriptions, part-time salaried help) and understating the true break-even point as a result.
- Assuming that reaching break-even means the business is now profitable overall — it means fixed costs are fully covered for that period; every unit beyond break-even is what actually contributes to profit.
Tips for Best Results
- Recalculate the break-even point whenever your selling price or a key variable cost changes — even a small shift in either number can noticeably move how many units are needed to cover fixed costs.
- Once you know your break-even unit count, compare it against a realistic sales forecast to judge whether the fixed cost structure (like a new lease) is actually affordable at expected volume.
Fixing Common Problems
My break-even number of units seems unreasonably high. — Check your per-unit margin (price minus variable cost) — if it's small relative to your fixed costs, it will naturally take many units to cover those costs; consider whether the price, variable cost, or fixed cost assumptions need revisiting.
I'm not sure whether a cost should count as fixed or variable. — Ask whether the cost changes directly with each unit sold or produced — if it does (materials, per-unit shipping), it's variable; if it stays the same regardless of sales volume (rent, salaried staff, insurance), it's fixed.
Terms Explained
Fixed costs: Costs that stay the same regardless of how much is sold, such as rent, salaried staff, or insurance.
Variable cost per unit: The cost that scales directly with each unit produced or sold, such as materials or per-unit shipping.
Margin per unit: Selling price minus variable cost per unit — the amount each sale contributes toward covering fixed costs, and toward profit once fixed costs are covered.