Break-Even Calculator
Free tool, no sign-up required
Break-even Units (monthly)
0
Break-even Revenue
$0
Contribution Margin
$0
Contribution Margin Ratio %
0.0%
The break-even point is how many units you need to sell, or how much revenue you need, before a business covers its fixed costs and starts turning a profit. It is a foundational number for anyone planning a product launch, a new location, or any venture with upfront fixed costs to recover. Most lenders and investors will ask for this number before backing a new venture.
Formula
Break-Even (units) = Fixed Costs / (Price per Unit - Variable Cost per Unit)
Price per Unit minus Variable Cost per Unit is your contribution margin, the amount each sale contributes toward covering your fixed costs before anything becomes profit for the business.
Example
Example: your fixed costs are $10,000 per month, you sell your product for $50, and it costs $30 to produce each unit. Break-Even = 10,000 / (50 - 30) = 500 units per month. Sell fewer than 500 units in a month and the business runs at a loss for that period, sell more and it turns a profit.
Industry Benchmark
There is no fixed good number for break-even. The goal is simply reaching it as fast as viable for the business, since every business's fixed costs, margins, and available runway are different, which is exactly why this number needs to be calculated per business, not borrowed from an industry average.
FAQ
How long should it take to reach break-even?
There is no universal timeline, since it depends on your industry, fixed costs, and pricing. What matters more than hitting a specific date is reaching break-even before your available capital runs out, so it is worth checking this number against your actual cash runway rather than an industry average or a competitor's timeline.
What's the difference between fixed and variable costs?
Fixed costs stay the same regardless of how much you sell, such as rent, salaries, and software subscriptions. Variable costs change with each unit produced or sold, such as materials, packaging, and payment processing fees. Break-even analysis depends on separating the two correctly, since only fixed costs sit in the formula's numerator and variable costs are already baked into the per-unit margin.
Related Tools
If You Don't Get Your First Sale Within 45 Working Days — We Work Free Until You Do
We stand behind our work completely. If your business doesn't receive its first sale within 45 working days of launch, we continue working — at no extra cost — until it does.
