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Costs that don't change with production (rent, salaries, etc.)
Costs that vary with production (materials, labor per unit)
Break-even analysis determines the point where total revenue equals total costs, meaning no profit or loss. It's a fundamental financial tool that helps businesses understand pricing strategies, cost structures, and profitability thresholds.
Enter your fixed costs, selling price per unit, and variable cost per unit. The calculator will determine your break-even point. Optionally enter units sold to see profit/loss analysis and safety margins.
Essential for entrepreneurs, business owners, managers, and financial analysts. Used for new product launches, pricing decisions, cost control, and investment analysis.
Break-even Units = Fixed Costs ÷ (Selling Price - Variable Cost per Unit). Break-even Revenue = Break-even Units × Selling Price per Unit.
Contribution margin shows how much each unit contributes to covering fixed costs and generating profit. Higher contribution margins mean lower break-even points and greater profitability.
Safety margin measures how far above break-even you are operating. Higher safety margins indicate lower business risk and greater financial stability.
Divide your total fixed costs by the contribution margin per unit (selling price minus variable cost per unit).
You cannot break even with negative contribution margins. You need to either increase prices or reduce variable costs.
It shows the minimum price needed to cover costs. Any price above this generates profit.
Safety margins above 20-30% are generally considered healthy, providing a buffer against sales fluctuations.
Recalculate whenever costs change significantly, prices are adjusted, or business conditions change.