Break-even calculator
Estimate how many units you need to sell to cover costs, and the revenue required to break even.
Contribution per unit = selling price minus variable cost per unit.
Results
These are estimates based on your inputs.
How this calculator works
Break-even units = (fixed costs + target profit) divided by contribution per unit.
Contribution per unit is your selling price minus variable cost per unit.
What this calculator does
This break-even calculator estimates how many units you need to sell before your business covers all costs. It also estimates the revenue needed at break-even.
You can add a target profit to see the sales level needed to move from break-even to a chosen profit level.
How the formula works
First, we calculate contribution per unit: selling price minus variable cost per unit. Then we divide total required contribution (fixed costs plus optional target profit) by contribution per unit.
The result gives break-even units. Break-even revenue is that unit count multiplied by selling price.
Worked example
Example: fixed costs £4,000, selling price £25, variable cost £12. Contribution per unit is £13. Break-even units are about 308, and break-even revenue is about £7,700.
If you set a £2,000 target profit, required units rise because total required contribution is higher.
Common mistakes
- Using gross margin percentage instead of unit contribution.
- Forgetting to include all fixed costs.
- Setting variable cost higher than selling price.
- Assuming break-even sales happen evenly through the year.
When to use this calculator
Use this for pricing decisions, budget planning, and sales targets. It is especially useful when launching a product or reviewing business viability.
FAQs
What if my variable costs change with volume?
This calculator assumes a fixed variable cost per unit. If costs change by volume, use separate scenarios.
Should I include owner salary in fixed costs?
If owner salary is a regular operating cost, include it to get a more realistic break-even point.
Can I use this for services instead of products?
Yes, if you can estimate revenue per sale and variable cost per sale.