Break-Even Calculator — Units, Sales and Margin of Safety

Put in what it costs you to open the doors each month, what you charge, and what each sale costs you. You get the number of units and the amount of revenue at which you stop losing money — and, if the price sits below the unit cost, a straight answer that no volume will ever get you there.

Created by Ashar PervaizLast updated 6 November 2026

One Division, and What It Is Really Asking

Break-even is the point where what comes in equals what goes out. Below it you are funding the business; above it the business funds you. The formula is short enough to do on a napkin:

units = fixed costs ÷ (price − variable cost)

The bracket is doing the real work and it has a name: contribution. It is what is left of a sale once the costs that arrived with that sale are paid, and it is the amount each sale contributes towards the costs that were there before anyone bought anything. The division is just asking how many contributions it takes to cover them.

Setting that price is a different job, and the markup and margin calculator is the one for it — this page takes the price as given and asks how many of them you need.

Twelve thousand a month in fixed costs, selling at 25 against 10 of cost: each sale contributes 15, and 12,000 ÷ 15 = 800 units. In revenue that is 800 × 25 = 20,000, which you can also reach directly by dividing the fixed costs by the contribution margin ratio — 12,000 ÷ 0.60 = 20,000. The two routes agreeing is the check worth doing.

Why the Answer Rounds Up

Change those fixed costs to 12,010 and the division gives 800.67 units. Most calculators print that, and a few quietly round it down to 800. Both are wrong in a way that matters, because you cannot sell two thirds of a thing.

At 800 units you have earned 800 × 15 = 12,000 of contribution against 12,010 of fixed costs. You are ten short — still losing money, on the day the calculator told you that you had broken even. At 801 you have 12,015 against 12,010, and you are five ahead. The first whole unit that clears the line is 801, and that is the number this calculator gives you.

When There Is No Break-Even At All

If the price is below the variable cost, the bracket goes negative and the formula returns a negative number of units. It is arithmetically fine and practically meaningless, and a calculator that prints it is telling you something false.

What is actually true is that there is no break-even point. Every sale loses money before the fixed costs are considered at all, so volume makes the position worse rather than better. This is not an obscure edge case — it is where a business that has underpriced finds itself, and the instinct to sell more is exactly the wrong one. This tool says so in words instead of returning a number.

The same applies when price and variable cost are equal. The contribution is zero, every sale washes its own face and nothing is left over, so the fixed costs sit there untouched however busy you get.

Fixed, Variable, and the Line Between Them

Fixed costs are the ones that do not move with sales: rent, salaries, insurance, software, business rates. Variable costs arrive with each sale — materials, packaging, the card processing fee, any per-item commission, and shipping out.

Use the price excluding sales tax. VAT and its equivalents are collected on someone else's behalf rather than earned, so putting a tax-inclusive price in here overstates every figure on the page; the VAT calculator will strip it out if your figure includes it.

The split is a judgement rather than a rule, and it is where most break-even calculations quietly go wrong. Part-time staff whose hours rise with demand are not really fixed. Delivery charged per order is not really fixed. Putting a genuinely variable cost in the fixed column flatters the contribution per unit, which shrinks the break-even figure and gives you a target you will hit on paper and miss in the bank.

What the Contribution Margin Ratio Does

The ratio is the contribution expressed as a share of the price, and it is the version you want when you sell many things at many prices and counting units makes no sense. A restaurant, an agency and a shop all work in revenue rather than units.

It also shows how unforgiving a thin margin is. Every row below takes the same 10,000 of fixed costs and asks what revenue it takes to cover them.

Halving the margin does not add half as much again to the target, it doubles it. A business at 20% needs five times its fixed costs in revenue before it earns anything; at 50% it needs twice. This is why a modest price rise can move the break-even point further than a large cut in overheads, and why discounting is so much more dangerous than it looks — the discount comes out of the contribution, which is the small number, not out of the price. The discount calculator works out the reduced price itself; what it cannot tell you is how much further down the line this table just moved.

Selling For a Target, Not Just For Zero

Break-even is rarely the actual goal. Add the profit you want to the fixed costs and divide by the same contribution, and you have the volume that earns it: (12,000 + 6,000) ÷ 15 = 1,200 units, or 30,000 in sales. Checking it the long way round, 1,200 × 15 = 18,000 of contribution, less 12,000 of fixed costs, leaves exactly the 6,000 you asked for.

Treating a profit target as a fixed cost you have chosen to carry is the mental shift that makes the number useful. The wage you want to pay yourself belongs in that line too, which is a more honest way of setting it than taking what is left — and if you are self-employed, so does the tax on it, which the freelancer tax calculator will size for you.

Margin of Safety: How Far You Can Fall

Break-even tells you where the line is. The margin of safety tells you how far above it you are standing, as a share of current sales. Breaking even at 800 units while selling 1,000 gives a margin of safety of 200 units, or 20%.

It is the figure to watch in anything seasonal, because an annual average can look comfortable while individual months sit underwater. A 20% cushion on the year can still mean three months of losses carried by a strong December, and the business that fails is the one that ran out of cash in October while the yearly figure looked fine.

Break-Even Calculator Questions