Break-even is the sales volume at which revenue covers all costs and profit is exactly zero. Divide fixed costs by the contribution margin per unit, which is price minus variable cost per unit. Fixed costs of $4,800 with a $12.00 price and a $4.25 variable cost give a $7.75 contribution margin and a break-even point of 620 units.
Break-even units = Fixed costs / (Price minus Variable cost per unit)| Units | Revenue | Total costs | Profit |
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Every business has a line where it stops losing money. Below it, the month’s sales have not yet paid for rent, salaries, insurance, and the other bills that arrive whether or not anything sells. Above it, each additional sale is profit. The break-even point is that line, and this calculator finds it from three numbers: your fixed costs for the period, your price per unit, and your variable cost per unit.
Contribution margin does the heavy lifting
The mechanism is worth understanding, because it changes how you read your own prices. Each unit you sell brings in its price and takes its variable cost with it: materials, packaging, transaction fees, anything you pay only when a sale happens. What remains is the contribution margin, and it is the only money available to pay fixed costs. Sell a $12.00 item with $4.25 of variable cost, and each sale contributes $7.75. If fixed costs are $4,800 for the month, you need $4,800 of contributions, which is 620 units. Until unit 620, contributions are paying bills. From unit 621 on, each sale drops $7.75 straight to profit.
The calculator reports the contribution margin in dollars and as a ratio of price, then gives break-even in both units and revenue. It rounds units up, because selling 619.35 units is not a thing a business can do, and the revenue figure reflects that whole-unit count.
Breaking even is not the goal. Set a profit target.
No one opens a business to end the month at zero, so the calculator takes an optional fourth number: the profit you want the period to produce. It treats that target as one more fixed amount the contributions must cover and reports how many units get you there. The same $4,800 of fixed costs with a $2,500 profit target needs 942 units, not 620.
Below the headline numbers, a volume table shows profit at several sales levels on both sides of break-even. That table is the part worth staring at. It makes the geometry of the business visible: how steep the losses are below the line, how quickly profit accumulates past it, and how far your realistic sales volume sits from the point where the math turns in your favor.
The inputs come from your other pricing numbers
Price and variable cost per unit are the same two figures the markup calculator and the margin calclulator work with; what those pages call profit per unit is this page’s contribution margin. A workable routine is to set per-unit pricing there, then bring the numbers here to see how many units the month actually demands. If the break-even volume looks unreachable, the fix is some combination of price, per-unit cost, and overhead, and rerunning the three numbers takes seconds.
As with every GlassJar tool, all of it happens in your browser. Your costs, prices, and targets are never transmitted anywhere, saving between visits is opt-in on your own device, and the analysis exports to PDF, Excel, or CSV once it says something worth keeping.
Break-even reference tables
| Contribution margin per unit | $2,000 fixed | $5,000 fixed | $10,000 fixed | $20,000 fixed |
|---|---|---|---|---|
| $2.00 | 1,000 units | 2,500 units | 5,000 units | 10,000 units |
| $5.00 | 400 units | 1,000 units | 2,000 units | 4,000 units |
| $10.00 | 200 units | 500 units | 1,000 units | 2,000 units |
| $20.00 | 100 units | 250 units | 500 units | 1,000 units |
| $50.00 | 40 units | 100 units | 200 units | 400 units |
| What you want | Formula |
|---|---|
| Contribution margin per unit | Price minus Variable cost per unit |
| Contribution margin ratio | Contribution margin per unit / Price |
| Break-even units | Fixed costs / Contribution margin per unit |
| Break-even revenue | Fixed costs / Contribution margin ratio |
| Units for a profit target | (Fixed costs + Target profit) / Contribution margin per unit |
Frequently Asked Questions
How do I calculate my break-even point?
Divide your fixed costs for the period by your contribution margin per unit, which is price minus variable cost. With $4,800 in fixed costs, a $12 price, and $4.25 of variable cost, break-even is 4,800 divided by 7.75, which rounds up to 620 units.
What is the difference between fixed and variable costs?
Fixed costs arrive regardless of sales volume: rent, salaries, insurance, software subscriptions. Variable costs occur once per unit sold: materials, packaging, shipping, payment processing fees. The split matters because only variable costs scale with sales, and the break-even formula treats the two completely differently.
What is contribution margin?
Contribution margin is price per unit minus variable cost per unit: the part of each sale left over to pay fixed costs, and, once those are covered, to become profit. Expressed as a percentage of price it is called the contribution margin ratio.
How do I work a profit target into break-even analysis?
Add the target profit to your fixed costs and divide by the contribution margin per unit. The calculator on this page has a field for this, and reports the unit count needed to end the period at your target rather than at zero.
What is break-even revenue?
It is the sales revenue at the break-even unit count, calculated here as break-even units times price per unit. It expresses the same line in dollars instead of units, which is easier to compare against past months’ sales.
Are my numbers private?
Yes. The entire calculation runs in your browser and no figure you enter is ever sent to GlassJar. Only your email address is transmitted, and only if you choose to download your analysis as a file.
How do I calculate break-even in dollars instead of units?
Divide fixed costs by the contribution margin ratio, which is the contribution margin per unit divided by the price. With $4,800 in fixed costs, a $12.00 price and a $7.75 contribution margin, the ratio is 0.6458 and break-even revenue is $7,432. That figure is more useful than a unit count when you sell many products at different prices.
What is the break-even formula in Excel?
With fixed costs in B1, price in B2 and variable cost per unit in B3, enter =B1/(B2-B3) for break-even units and =B1/((B2-B3)/B2) for break-even revenue. Add a target profit in B4 and =(B1+B4)/(B2-B3) gives the units required to earn it.
What is the margin of safety?
The margin of safety is how far current sales sit above the break-even point, usually expressed as a percentage of current sales. If you break even at 620 units and currently sell 800, the margin of safety is 180 units, or 22.5%. It is a direct measure of how much of a downturn you can absorb before the business starts losing money.
How does break-even work for a service business with no per-unit cost?
When there is no material cost, the variable cost per unit is close to zero and the contribution margin is effectively the full price. Break-even then becomes fixed costs divided by your price per job or per billable hour. A consultant with $6,000 of monthly fixed costs billing $150 an hour breaks even at 40 billable hours a month.
What happens to my break-even point if I raise prices?
It falls, and faster than most people expect, because the price increase lands entirely in the contribution margin. Raising a $12.00 price to $13.00 lifts the contribution margin from $7.75 to $8.75 and drops break-even from 620 units to 549, an 11.5% reduction in the volume you need from a price rise of 8.3%.
How do I calculate break-even when I sell several different products?
Work in revenue rather than units. Calculate the contribution margin ratio for the business as a whole, which is total contribution margin divided by total revenue, then divide fixed costs by that ratio. The answer is the sales dollars you need. Recalculate whenever the sales mix shifts, because a move toward lower-margin products raises the revenue required even when nothing else changes.
