Find the exact point where your sales start turning a profit.
What is the break-even point?
Your break-even point is the number of units you must sell to cover all your costs — the moment you stop losing money and start making it. Below it you're in the red; above it, every additional sale is profit.
Break-even units = Fixed costs ÷ (Price per unit − Variable cost per unit)
With $10,000 in fixed costs, a $50 price, and $30 variable cost per unit, you break even at $10,000 ÷ ($50 − $30) = 500 units, or $25,000 in revenue.
The key idea: contribution margin
The denominator — price minus variable cost — is your contribution margin per unit: the slice of each sale left over to cover fixed costs. At $20 per unit here, it takes 500 units to cover $10,000 of fixed costs. Raise your price or cut variable costs and the contribution margin grows, so you break even sooner. If price is below variable cost, contribution is negative and you can never break even no matter how much you sell.
Why it matters
Break-even analysis tells you the minimum viable scale of a product, campaign, or whole business. Pair it with your profit margin and marketing budget to set realistic sales targets before you commit spend.
Frequently asked questions
How do you calculate the break-even point?
Divide fixed costs by the contribution margin per unit (price minus variable cost per unit). For example, $10,000 in fixed costs with a $20 contribution margin breaks even at 500 units.
What is contribution margin?
Contribution margin is price per unit minus variable cost per unit — the portion of each sale that goes toward covering fixed costs and then profit. A higher contribution margin lowers your break-even point.
What is the difference between fixed and variable costs?
Fixed costs stay the same regardless of how much you sell (rent, salaries, software). Variable costs change with each unit sold (materials, shipping, transaction fees). Both are needed to find your break-even point.
How do I lower my break-even point?
Reduce fixed costs, raise your price, or cut variable cost per unit. Any of these increases the contribution margin or shrinks what it must cover, so you reach profitability with fewer sales.
What is break-even revenue?
Break-even revenue is the total sales dollars you need to cover all costs — break-even units multiplied by your selling price. This calculator shows both so you can set revenue targets alongside unit targets.
Can break-even analysis be used for a new product?
Yes — it is one of the best early tests for a new product. Enter your expected fixed costs, price, and variable cost per unit to see how many units you must sell before the product pays for itself.