Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Break-even tells you the volume where a business stops losing money, not the volume where it starts being worth running. Those are two different thresholds, and confusing them leads to green-lighting a product line that technically clears break-even while returning far too little to justify the effort behind it.
Before you rely on it
What to check
Compare the break-even volume against realistic sales projections and against what return the business actually needs, not just whether the volume is theoretically reachable.
The common error
Where people go wrong with business break-even calculator
Treating above break-even as the goal itself rather than the floor. A product barely clearing break-even is still using resources, time, capital, attention, that could earn more somewhere else.
Sensitivity evidence
How selling price per unit changes the break-even units
| Selling price per unit | Break-even units | Break-even revenue |
|---|---|---|
| $80 | 4,000 | $320,000 |
| $90 | 2,857.1 | $257,143 |
| $100worked example | 2,222.2 | $222,222 |
| $110 | 1,818.2 | $200,000 |
| $120 | 1,538.5 | $184,615 |
Every input, tested
Which input moves the break-even units most
| Input | Tested from | To | Break-even units at each end | Swing |
|---|---|---|---|---|
| Selling price per unit | $90 | $110 | 2,857.1 to 1,818.2 | 1,039 (47%) |
| Variable cost per unit | $50 | $61 | 2,000 to 2,564.1 | 564.1 (25%) |
| Fixed costs | $90,000 | $110,000 | 2,000 to 2,444.4 | 444.4 (20%) |
Two variables at once
Break-even units by selling price per unit and fixed costs
| Selling price per unit \ Fixed costs | $80,000 | $100,000 | $120,000 |
|---|---|---|---|
| $80 | 3,200 | 4,000 | 4,800 |
| $90 | 2,285.7 | 2,857.1 | 3,428.6 |
| $100 | 1,777.8 | 2,222.2 | 2,666.7 |
| $110 | 1,454.5 | 1,818.2 | 2,181.8 |
| $120 | 1,230.8 | 1,538.5 | 1,846.2 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Fixed costs | $100,000 |
| Selling price per unit | $100 |
| Variable cost per unit | $55 |
| Break-even units | 2,222.2 |
| Break-even revenue | $222,222 |
Where the inputs come from
Fixed costs are the expenses that do not change with sales volume in the period: rent, salaries, insurance, software and loan payments. Selling price per unit is your average net price, and variable cost per unit is what each extra unit costs you, such as materials, packaging, shipping and sales commissions. Be honest about whether a cost is truly fixed; many costs are semi-variable and step up at certain volumes.
When the result stops applying
The model assumes a single product with a constant price and cost, which rarely holds; a mix of products needs a weighted average contribution. Fixed costs step up as you grow, and discounting or volume pricing lowers the contribution. Break-even ignores the time to reach it and the cash needed to survive until then.
What to compare it with
Use the contribution margin calculator for the per-unit profit and the profit goal calculator to find volume for a target profit. The operating leverage page shows how sensitive profit is to volume changes, and the burn rate calculator shows how long cash lasts before break-even. For service firms, the break-even occupancy or billable-hours pages work the same way.
People also ask
Frequently asked questions
What is a break-even point?
The sales volume at which total revenue equals total costs, so profit is zero. Above it the business earns a profit, and below it a loss.
How can I lower my break-even point?
Raise prices, cut variable costs per unit, or reduce fixed costs. Each raises the contribution per unit or lowers the amount that contribution must cover.
Does break-even include my own salary?
It should, if you want the business to support you. Leaving out an owner's pay can make the break-even look lower than it really is.