Break-even Calculator
Materials, labour per unit
The break-even point is the level of sales at which total revenue equals total costs — producing neither a profit nor a loss. It is one of the most fundamental concepts in business planning, telling you the minimum output needed to cover all costs.
Tip: Lowering variable costs often has a bigger impact on break-even than raising prices, because it improves every unit sold.
- 1List all fixed costs (rent, salaries, insurance) — costs that do not change with output
- 2Identify the selling price per unit and variable cost per unit
- 3Calculate contribution margin: Selling price − Variable cost per unit
- 4Divide total fixed costs by the contribution margin to get break-even units
Multiple products
When selling several products, calculate a weighted average contribution margin based on the sales mix before dividing fixed costs.
Break-even revenue
Multiply break-even units by price per unit to get break-even revenue in currency terms.
| Price increase | Contribution margin | Break-even units (FC=$10k, VC=$30) |
|---|---|---|
| +$0 ($50) | $20 | 500 |
| +$5 ($55) | $25 | 400 |
| +$10 ($60) | $30 | 333 |
| +$20 ($70) | $40 | 250 |
Fun Fact
The term "break-even analysis" was popularised in the 1930s by Walter Rautenstrauch, though merchants have instinctively calculated it for centuries.