BCBetter Calculators

Break-Even Calculator

Find out exactly how many units you need to sell to cover your business costs.

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Enter your values and click Calculate

How It Works

The break-even calculation uses the contribution margin approach. Step 1: compute the contribution margin per unit by subtracting the variable cost from the selling price — contributionMargin = pricePerUnit − variableCostPerUnit. This represents how much each unit sale contributes toward covering fixed costs after its own production cost is paid. Step 2: divide total fixed costs by the contribution margin to get the break-even unit count — breakEvenUnits = fixedCosts ÷ contributionMargin. This is always rounded up to the next whole unit because you cannot sell a fractional product. Step 3: multiply break-even units by the selling price to get break-even revenue. Step 4: compute the gross margin ratio as (contributionMargin ÷ pricePerUnit) × 100 to show what percentage of each sale is margin rather than variable cost. If the selling price is not strictly greater than the variable cost, break-even is mathematically impossible and the calculator returns an error.

Examples

Selling T-Shirts
Fixed costs of $1,000 (equipment), selling shirts for $20 each that cost $5 to make.
Result: You need to sell 67 shirts to break even, generating $1,340 in revenue.
SaaS Software Subscription
Monthly server costs of $5,000, selling a subscription for $99/mo with variable costs of $9/mo.
Result: Requires 56 subscribers to break even, generating $5,544 in revenue.
Food Truck Item
Permits and truck lease are $2,500. Selling burgers for $10 with food costs of $4 per burger.
Result: Requires selling 417 burgers to break even.

Frequently Asked Questions

What are fixed costs?
Fixed costs are expenses that remain constant regardless of how many units you produce or sell. Common examples include rent, insurance premiums, salaried staff, software subscriptions, and equipment depreciation. Because they do not scale with output, fixed costs spread thinner per unit the more you sell — which is why reaching and exceeding break-even volume is so important for profitability.
What are variable costs?
Variable costs scale directly with production or sales volume. Every additional unit you produce or sell adds this cost. Examples include raw materials, packaging, per-transaction payment processing fees, shipping, and hourly labor tied to production. Reducing variable cost per unit — through bulk purchasing or process improvements — directly lowers the break-even point and improves margin on every unit sold.
Why does the calculator say my price must be greater than my variable cost?
If your selling price is equal to or less than your variable cost per unit, you lose money on every single sale. No amount of sales volume will ever cover your fixed costs because each sale digs the hole deeper rather than filling it. Break-even is mathematically impossible in this scenario, and the calculator returns an error to prevent you from building a plan on a fundamentally unworkable pricing model.

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