Break-Even Point Calculator
How it works
Each unit's contribution margin — price minus its own variable cost — is what that sale actually contributes toward the fixed costs, which do not budge with volume. Dividing the fixed costs by that contribution margin gives the number of units needed before they are fully covered: fixedCosts / (price − variableCost). Multiplying that unit count back by the price gives the same break-even point in revenue instead.
The contribution margin ratio expresses the same margin as a share of price rather than a dollar amount, which is useful for comparing products at different price points: a $20 margin means very different things on a $25 item and a $200 one.
Frequently asked questions
What is contribution margin?
The price of one unit minus its own variable cost — what is left over from that single sale to put toward the fixed costs (rent, salaries, equipment) that do not change with volume. Once enough units have been sold for their combined contribution margin to cover the fixed costs, every further sale is profit.
Why is a zero or negative contribution margin an error rather than an infinite break-even point?
If a unit costs more to make than it sells for, no volume of sales ever pays off the fixed costs — each additional sale makes the loss bigger, not smaller. Reporting that as "infinite units" would suggest selling more is a path forward when it is actually the opposite, so this is flagged as invalid input instead.
How is this different from profit margin?
Profit margin is a percentage: profit as a share of revenue on a sale you've already made. Break-even is a volume: the specific number of units (and the revenue they add up to) needed before fixed costs are covered at all. Margin describes how profitable each sale is; break-even describes how many of them get you out of the hole.