Business & selling
Break-Even Calculator
Find how many units you must sell to cover your fixed costs, the sales that takes, your contribution margin, margin of safety and target-profit volume.
Break-even point
225 units
$22,500.00 of sales to cover $18,000.00 of fixed costs
Contribution margin
$80.00 a unit
80% of the price goes to fixed costs and profit
Profit at expected sales
$6,000.00
300 units, $30,000.00 of sales
Margin of safety
25%
75 units or $7,500.00 of sales above break-even
Sales for your target profit
425 units
$42,500.00 of sales to make $16,000.00
How 225 units was worked out
Each sale brings in $100.00 and costs $20.00 to make, leaving $80.00 towards the fixed costs. $18,000.00 ÷ $80.00 = 225 units. In money, $18,000.00 ÷ 80% = $22,500.00.
How the 25% margin of safety was worked out
Expected sales of $30,000.00 less break-even sales of $22,500.00 is $7,500.00, which is 25% of expected sales: the share of sales you could lose before the period stops making money. Profit of $6,000.00 is 4 times smaller than the $24,000.00 contribution, so a 10% fall in sales would cut profit by about 40%.
How 425 units for the target was worked out
The target is treated as one more fixed cost to cover: ($18,000.00 + $16,000.00) ÷ $80.00 = 425.
One product at a constant price and cost. An estimate, not financial advice, providers may calculate differently.
- Revenue
- Total cost
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How this is calculated
Every sale leaves you its price minus the cost of making it, the contribution margin, and the calculator divides your fixed costs by that figure to find how many units cover them, rounding up to a whole unit. It then adds your target profit to the fixed costs to find the volume that earns it, and compares your expected sales with break-even to give the margin of safety, the share of sales you could lose before the period runs at a loss. Enter all amounts for one period, a month or a year, and use prices without VAT or sales tax.
Break-even unitsF ÷ (P − V)
Break-even salesF ÷ ((P − V) ÷ P)
- F
- fixed costs for the period
- P
- selling price per unit
- V
- variable cost per unit
What this does not include
- Price cuts for volume, or costs per unit that fall as you buy more.
- Fixed costs that step up at higher volumes, such as a second machine or another hire.
- Several products sold together: a sales mix needs a weighted contribution margin.
- Income tax on the profit: the target is a profit before tax.
- The timing of cash: break-even here is profit, not money in the bank.
How this calculator works
Break-even analysis explained: units, sales and the margin of safety. The contribution margin formula behind break-even, a birdbath maker worked from fixed costs to target profit, and which costs belong in which box.
This calculator is for general information only and is not financial advice. Results are estimates based on the figures you enter and the stated formula; lenders and providers may round or calculate differently. Check any decision with the institution involved or a qualified adviser.