Enter your monthly fixed costs, the sale price and the variable cost per unit. You will see how many units you need to sell to avoid losing money and how many to earn what you’re aiming for.
The preloaded values are an example: replace them with your own figures.
Break-even point
With these figures, you need to sell 200 units a month (about $5.000,00 in sales) to cover your fixed costs of $3,000.00. Each unit contributes $15,00 in contribution margin. To earn $1,000.00 a month you would need 267 units ($6.666,67).
Revenue vs. costs by units sold
| Units | Revenue | Total costs | Result |
|---|---|---|---|
| 100 | $2.500,00 | $4.000,00 | -$1.500,00 |
| 150 | $3.750,00 | $4.500,00 | -$750,00 |
| 200 | $5.000,00 | $5.000,00 | +$0,00 |
| 250 | $6.250,00 | $5.500,00 | +$750,00 |
| 300 | $7.500,00 | $6.000,00 | +$1.500,00 |
| 400 | $10.000,00 | $7.000,00 | +$3.000,00 |
Results are for reference only and are not actual figures. Values depend on the country, the financial institution, taxes and current laws, and must be validated with an authorized financial institution. Banco.guru is an educational guide to what can be achieved; it does not offer products or personalized financial advice.
Tips for using this result
- If you sell several products, use a weighted average price and variable cost.
- Lowering fixed costs lowers the break-even point for good.
- Raising the price increases the contribution margin, but may lower volume.
- Check your cash flow with the working capital calculator.
What is the break-even point?
It is the level of sales at which your business neither earns nor loses: revenue exactly covers fixed and variable costs. Below that point there are losses; above it, profits. Knowing it tells you your minimum sales target each month.
The formula
Break-even point (units) = Fixed costs ÷ (Price − Unit variable cost). The difference between price and variable cost is called the contribution margin: what each sale contributes to covering fixed costs. In money, the break-even point is those units × price. For a target profit, the desired profit is added to the fixed costs.
Example
With fixed costs of 3,000 a month, a price of 25 and a variable cost of 10, each unit contributes 15. You need 200 units (5,000 in sales) to cover costs. To earn 1,000 a month you would need about 267 units.
Fixed vs. variable costs
- Fixed: don’t change with volume in the short term (rent, base salaries, insurance, software).
- Variable: rise with each unit sold (materials, packaging, sales commissions, shipping).
Classifying them correctly is the most important part of the calculation. If in doubt, see a business’s operating expenses.
How to use the result
Compare the break-even point with your real or projected sales. If it is very close to your maximum capacity, the business is fragile: any drop in sales generates losses. Try price and cost scenarios in the calculator before deciding.
Frequently asked questions
How is the break-even point calculated?
Divide your fixed costs by the contribution margin per unit (price minus unit variable cost). The result is the number of units you must sell to avoid losing money.
What is the contribution margin?
It is what remains of each sale after paying its variable cost; it serves to cover fixed costs and generate profit.
What do I do if I sell many different products?
Use a price and variable cost averaged by sales mix, or calculate the break-even point in money with the percentage contribution margin.
Does the break-even point include taxes?
This calculator does not include income taxes. Add them to the target profit if you want to estimate them.
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