The break-even point is the sales volume at which total revenue equals total costs — where the business neither makes a profit nor incurs a loss. Every unit sold above the break-even point contributes to profit; every unit below contributes to loss. Knowing your break-even point is fundamental to pricing decisions, investment justification, and minimum viable sales targets. The Break-Even Calculator uses the contribution margin method: BEP (units) = Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit). The difference between selling price and variable cost is the contribution margin — what each sale contributes toward covering fixed costs and then generating profit.
lightbulb When to use this tool
- check_circle Determining the minimum sales volume needed to cover all costs before launching a new product or business.
- check_circle Justifying a new investment by calculating how many additional units need to be sold to break even.
- check_circle Setting sales targets for a team based on the minimum volume needed to cover overheads.
- check_circle Evaluating the impact of a price change or cost reduction on the break-even point.
Why use our tool?
Break-Even in Units AND Revenue
BEP (units) = Fixed Costs ÷ Contribution Margin per unit. BEP (revenue) = Fixed Costs ÷ Contribution Margin ratio. Both are shown.
Target Profit Calculation
Extend beyond break-even: enter a target profit and calculate the required sales volume to achieve it. Volume for target profit = (Fixed Costs + Target Profit) ÷ Contribution Margin per unit.
Contribution Margin Ratio
The CM ratio (contribution margin as % of selling price) is displayed — useful for quickly calculating profit impact of revenue changes: a 10% revenue increase on a 60% CM ratio product increases profit by 6% of the revenue amount.
How it works
Enter selling price per unit.
Enter variable cost per unit (materials, direct labour, per-unit shipping, per-unit commissions).
Enter total fixed costs per period (rent, salaries, software, utilities).
The BEP in units and revenue display instantly.
Optionally enter a target profit to find the required sales volume.
Examples
science Software Product Break-Even
Selling price: ₹2,000/month | Variable cost per customer: ₹200 (hosting, support) | Fixed costs: ₹3,00,000/month
Contribution margin: ₹1,800/customer
BEP: ₹3,00,000 ÷ ₹1,800 = 167 customers
BEP revenue: 167 × ₹2,000 = ₹3,34,000/month