Break-Even Calculator
Calculate your break-even point in units and revenue. Enter fixed costs, variable costs, and selling price.
Break-even units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit). Below that, you lose money; above it, every sale is profit. The denominator is the contribution margin, how much each sale contributes to covering fixed costs. Break-even revenue = units × selling price.
Enter your fixed costs, variable cost per unit, and selling price in any currency below.
Break-Even Calculator
Rent, salaries, insurance
Materials, shipping
What Break-Even Analysis Actually Tells You
Every business has a magic number, the exact point where revenue covers all costs and you stop losing money. That's your break-even point. Below it, you're burning cash. Above it, you're making profit. Knowing this number changes how you price products, plan launches, and decide whether a business idea is even viable.
Think of it like filling a bathtub with water while the drain is open. Fixed costs are the drain, they flow out regardless. Variable costs are the water pressure changing as you turn the tap. Break-even is the moment the water level stops dropping and starts rising.
The formula is straightforward: Break-Even Units = Fixed Costs / (Selling Price - Variable Cost per Unit). That denominator, selling price minus variable cost, is your contribution margin. It's how much each sale contributes toward covering your fixed costs.
Contribution Margin: The Number That Matters Most
Your contribution margin is the real driver of profitability. A high contribution margin means each sale makes a big dent in your fixed costs. A thin one means you need massive volume to break even.
| Scenario | Selling Price | Variable Cost | Contribution Margin | Margin % |
|---|---|---|---|---|
| Premium product | £100 | £25 | £75 | 75% |
| Mid-range product | £50 | £20 | £30 | 60% |
| Budget product | £20 | £12 | £8 | 40% |
| Commodity item | £5 | £3.50 | £1.50 | 30% |
| SaaS subscription | £29/mo | £2/mo | £27 | 93% |
| Restaurant meal | £18 | £5.40 | £12.60 | 70% |
What this means for you: SaaS and digital products have sky-high contribution margins because variable costs are near zero. Physical products sit lower. If your margin is under 30%, you need serious volume, or a price increase.
Break-Even in Practice: Real Examples
| Business Type | Fixed Costs/Month | Price | Variable Cost | Break-Even Units |
|---|---|---|---|---|
| Coffee shop | £8,000 | £3.50 | £0.80 | 2,963/month |
| Online course | £2,000 | £97 | £3 | 22/month |
| T-shirt brand | £3,500 | £25 | £8 | 206/month |
| Consulting firm | £15,000 | £150/hr | £10/hr | 108 hrs/month |
| Food truck | £4,000 | £10 | £3.50 | 616/month |
What this means for you: A coffee shop needs to sell nearly 100 cups a day just to break even. An online course creator needs just 22 sales a month. The business model you choose determines how hard you have to work to reach profitability.
Four Ways to Lower Your Break-Even Point
Raise your price
A 10% price increase often reduces break-even units by 20-30%. Most businesses underprice. Test higher prices, you might lose fewer customers than you think.
Cut fixed costs
Every pound you remove from fixed costs directly reduces the number of sales you need. Remote work, shared spaces, and automation all help here.
Reduce variable costs
Negotiate with suppliers, buy in bulk, or switch materials. Even small per-unit savings compound across thousands of sales.
Change the product mix
Shift sales toward higher-margin products. A cafe that sells more pastries (70% margin) alongside coffee (60% margin) breaks even faster.
Common Break-Even Mistakes
The biggest mistake? Forgetting costs. People include obvious fixed costs like rent but miss insurance, software subscriptions, loan repayments, and their own salary. If you're not paying yourself, you haven't really broken even, you've just created an unpaid job.
Another trap: assuming variable costs stay constant at scale. Materials might get cheaper with bulk orders, but you might also need extra staff, bigger premises, or more equipment. Your break-even point shifts as you grow.
Finally, break-even analysis assumes you sell everything you produce. If you're making physical products, factor in waste, returns, and unsold inventory. A 5% return rate effectively raises your break-even point by 5%.
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How to use this tool
Enter your total fixed costs
Enter the variable cost per unit
Enter the selling price per unit
Common uses
- Determining how many units to sell before turning a profit
- Pricing products based on cost structure and margin targets
- Evaluating whether a new product or business idea is viable
- Comparing profitability of different product lines
- Planning sales targets for new business launches
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Frequently Asked Questions
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Results are for general informational purposes only and should be checked before use. They are not professional advice. See our Disclaimer and Terms of Service.