Break-Even Point

What is this tool?

The Break-Even calculator shows how many units you need to sell to cover all fixed and variable costs. It is a simple way to check if your price, volume, and cost structure make sense before committing to a new product, contract, or campaign.

Formula

This tool uses the standard break-even formula:
Break-even units = Fixed costs / (Price − Variable cost per unit)

• Fixed costs = costs that do not change with volume (rent, salaries, etc.).
• Price = selling price per unit.
• Variable cost per unit = cost that scales with each unit (materials, commissions, packaging, etc.).

Example

Assume fixed costs of 10,000, unit price of 25, and variable cost per unit of 10.

Break-even units = 10,000 / (25 − 10) = 10,000 / 15 ≈ 667 units.

In practice, this means you need to sell around 667 units just to cover your costs; only sales above this level will generate profit.

When should you use this tool?

• When launching a new product or entering a new market.
• When evaluating if a price cut or promotion still makes sense.
• When comparing alternative cost structures or business models.
• When preparing a simple business case for management or investors.
• When aligning marketing, operations, and finance around realistic volume targets.

How this tool helps your business

• Prevents underpricing by highlighting the volume needed to break even.
• Makes the trade‑off between fixed costs, variable costs, and price explicit.
• Improves decision quality for promotions, launches, and investments.
• Helps non-finance teams understand the financial impact of their decisions.

Related tools

• Margin & Markup Calculator – set prices that deliver the margin assumptions behind your break-even analysis.
• CSV Profit Analyzer – compare actual sales performance against break-even volume and margin.
• Discount Calculator – see how price changes push break-even units up or down.
• DCF Pricing Helper – assess profitability over time for long-term contracts and subscriptions.

Frequently Asked Questions

• Is break-even based on units or revenue?

  This calculator focuses on units. You can multiply break-even units by selling price to get the break-even revenue figure if you prefer to track sales in value.

• What costs should I include as fixed and variable?

  Fixed costs are expenses that don't change with volume in the short term. Variable costs scale with each unit. If in doubt, classify conservatively and document assumptions.

• Can I use this for services, not just products?

  Yes. As long as you can estimate a unit price and unit variable cost for your service, the break-even logic is the same.

• Does this calculator include taxes and commissions?

  You can incorporate them into variable cost per unit or adjust the price input accordingly. The key is to keep definitions consistent across scenarios.