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Break-Even Calculator

Find the number of units (or jobs) you need to sell each month to cover fixed costs. Useful for small business pricing, new product launches, and sanity-checking a service-business model.

Selling price must be higher than variable cost. When they are equal, every sale exactly covers its own variable cost but contributes nothing toward fixed costs — there is no break-even point.

Break-even units are rounded up because a partial unit cannot cover fixed costs. Real-world variations in pricing, mix, and overhead can shift the actual number — treat this as a planning benchmark, not a guaranteed outcome.

How this is calculated

Standard contribution-margin model. Contribution margin is what each sale contributes toward covering fixed costs. Break-even is the number of sales needed before contribution margin equals fixed costs.

  1. 1.Contribution margin

    selling price − variable cost

    If zero or negative, break-even is mathematically impossible — the calculator shows a warning.

  2. 2.Break-even units

    fixed costs ÷ contribution margin

    Rounded UP — you cannot break even at 7.2 units.

  3. 3.Break-even revenue

    break-even units × selling price

Real-world variation in pricing, sales mix, seasonality, and overhead changes will shift the actual number. Treat this as a planning benchmark — not a guaranteed sales target.

A worked example

A small SaaS company has $10,000/month of fixed costs (rent, salaries, software, insurance). It charges $50/month per customer, and the variable cost per customer (payment processing, support time, hosting) is $20.

Below 334 active paying customers, the business loses money. At 334, costs are exactly covered. Every additional customer past 334 contributes $30 of monthly profit.

Pricing decisions follow from break-even

The break-even calculation surfaces three pricing realities most small businesses do not face until cash is tight:

  1. Raising price by even a small amount can drastically reduce break-even units. Going from $50 to $55 in the example above increases contribution margin from $30 to $35 — break-even drops to 286 units (a 14% lower target).
  2. Cutting variable cost has the same effect. Negotiating payment processing from $1.50 to $1.00 per sale increases CM by $0.50 and lowers break-even proportionally.
  3. Fixed costs scale break-even linearly. Doubling fixed costs doubles break-even units. Adding a $2,000/month employee means 67 additional sales (at $30 CM) just to break even on that hire.

Where the calculator falls short

This is the simple single-product break-even formula. It assumes one selling price, one variable cost, and stable fixed costs. Real businesses sell multiple products at different prices with different variable costs and seasonal demand. For those, the formula generalizes but the math is more involved — and you need a full profit-and-loss view, not just the break-even point.

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Related calculators and guides

Break-even FAQs

What is a break-even point?
The number of units (or jobs, or hours) you need to sell at your current price for total revenue to exactly equal total costs. Below break-even you lose money; above it, every additional unit contributes profit. Knowing break-even is what lets you say "we need to do 6 jobs a month to keep the lights on" instead of guessing.
What goes into fixed costs?
Costs that do not change with how much you sell: rent or mortgage, salaries (yours and any employees you pay regardless of volume), software subscriptions, insurance, equipment payments, utilities at base levels, accounting and legal fees. If you stopped selling tomorrow and your costs would still hit, those are fixed costs.
What goes into variable cost per unit?
Costs that scale with each sale: direct materials, labor that is paid only when you do work, packaging, shipping, payment processing, and any subcontractor cost specific to that job. The hourly wage of a full-time salaried employee is fixed; the per-hour cost of a 1099 sub on a single job is variable.
What does contribution margin mean?
Selling price minus variable cost — what each sale contributes toward covering fixed costs. A $50 sale with $20 of variable cost has a $30 contribution margin. Once enough sales pile up to cover the fixed-cost number, every additional dollar of contribution margin is profit.
Why does the calculator round up?
You cannot break even at 7.2 units. The 0.2-unit fraction does not contribute its full contribution margin, so you need 8 actual sales to clear the fixed-cost line. The calculator rounds up to the next whole unit.
Why does the calculator refuse to compute when prices equal cost?
When the selling price equals the variable cost, contribution margin is zero — each sale covers its own variable cost but contributes nothing toward fixed costs. The break-even formula divides by contribution margin, which would give an infinite or meaningless answer. The calculator surfaces that explicitly rather than producing a wrong-direction number.

Related searches

profit margin calculatormarkup vs margin calculatorjob cost calculatorprofit and loss templateexpense tracker guideP&L statement guide

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