What is break-even point?

Break-even point is the sales level where total revenue equals total costs. Selling above this point generates profit; below it creates losses.

How do I calculate break-even point?

Divide your fixed costs by your contribution margin per unit (selling price minus variable cost). Multiply by selling price to get break-even revenue.

What is contribution margin?

Contribution margin is the amount each unit sale contributes toward covering fixed costs. It equals selling price minus variable cost per unit.

What counts as fixed costs?

Fixed costs don't change with production volume: rent, salaries, insurance, equipment leases, utilities. These costs exist whether you sell zero units or thousands.

What counts as variable costs?

Variable costs change with each unit produced: raw materials, direct labor, packaging, shipping, commissions.

How do I lower my break-even point?

Three ways: reduce fixed costs (lower overhead), reduce variable costs (better supplier pricing), or increase selling price (if market allows).

What if my selling price is lower than variable cost?

You can't break even. You lose money on every sale. Either increase prices or reduce variable costs.

Should I use monthly or annual costs?

Be consistent. If using monthly fixed costs, you get monthly break-even units. If annual, you get annual break-even. Match the time period.

How does break-even relate to profit goals?

Break-even is zero profit. To hit a profit target, add desired profit to fixed costs before dividing by contribution margin.

Is break-even analysis useful for distributors?

Yes. Distributors can use it per product line or customer segment to understand which accounts are profitable and which need repricing.

Break Even Calculator

Calculate your break-even point in units and revenue. Find out how many sales you need to cover all costs and start generating profit.

Enter Your Data

Enter costs and pricing to calculate break-even point

Industry Benchmarks: Break Even

These benchmarks show typical contribution margin ratios by industry. Higher contribution margins mean each sale covers more fixed costs, lowering your break-even point.

Industry	Low	Average	High
Manufacturing (High Volume)	60%	68%	75%
Manufacturing (Low Volume)	40%	48%	55%
Wholesale Distribution	18%	23%	28%
Retail	35%	42%	50%
Software/SaaS	80%	88%	95%
Food Service	60%	65%	70%

How to Use the Break Even Calculator

Step-by-Step Instructions

Enter your total fixed costs (rent, salaries, overhead)
Enter variable cost per unit (materials, labor, shipping)
Enter selling price per unit
View break-even units, revenue, and contribution margin

Formulas Used

Break-Even Units Formula

Break-Even Units = Fixed Costs / (Selling Price - Variable Cost)

The number of units you must sell to cover all fixed and variable costs.

Contribution Margin Formula

Contribution Margin = Selling Price - Variable Cost per Unit

The amount each unit sale contributes toward covering fixed costs and generating profit.

Break-Even Revenue Formula

Break-Even Revenue = Break-Even Units × Selling Price

The total revenue needed to reach the break-even point.

Contribution Margin Ratio

Contribution Margin Ratio = (Selling Price - Variable Cost) / Selling Price × 100

The percentage of each sales dollar that contributes to covering fixed costs.

Frequently Asked Questions: Break Even Calculator

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