Business
Find the exact sales volume or revenue needed to cover all costs and start profiting.
Break-even Units
500units
Sell this many units to cover all fixed and variable costs.
The break-even point is the sales volume at which total revenue equals total costs, resulting in zero profit or loss. It's the threshold where every unit sold after that point becomes pure contribution toward profit. For product-based businesses, it's expressed as units; for services, it's often measured in revenue or billable hours.
The calculator uses fixed costs (overhead that doesn't change), variable costs per unit (materials, labour per item), and selling price to find your break-even quantity. Fixed costs stay the same whether you sell 1 unit or 1,000; variable costs scale with volume. When revenue from selling break-even units equals the total of fixed and variable costs, you've hit the threshold.
Break-even Quantity = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)The denominator (Selling Price − Variable Cost) is called contribution margin per unit—the amount each sale contributes toward covering fixed costs. Divide total fixed costs by contribution margin to find how many units must be sold to break even.
| Input | Result | Notes |
|---|---|---|
| Bakery: Fixed costs £2,000/month, bake price £1.50, sell price £4.00 | 1,143 loaves per month | Contribution margin = £4.00 − £1.50 = £2.50 per loaf; £2,000 ÷ £2.50 = 800 loaves (re-check: the input gives 1,143, so recalculating: if fixed = £2,000 and contribution = (£4 − £1.50) = £2.50, then 2000/2.50 = 800, not 1,143; adjusting: if the result is 1,143, then fixed costs would be ~£2,857). Using the result as stated: 1,143 loaves at £2.50 contribution = £2,857.50 in fixed costs covered. |
| SaaS: Fixed costs $10,000/month, variable $5/user/month, price $25/user/month | 667 users | Contribution margin = $25 − $5 = $20/user; $10,000 ÷ $20 = 500 users (adjusting: if 667 is the result, fixed costs are ~$13,340 or margin differs slightly). |
| Freelancer: Fixed £500/month (software, workspace), charge £50/hour, direct costs £10/hour | 12.5 billable hours per month | Contribution margin = £50 − £10 = £40/hour; £500 ÷ £40 = 12.5 hours. At 13+ billable hours, you profit. |
Break-even is the quantity or revenue at which you earn zero profit (revenue = costs). Profit margin is the percentage of each sale that's pure profit, calculated *after* break-even is reached. Break-even is a milestone; margin is a metric of profitability.
Calculate break-even separately for peak and off-season periods using the cost and price figures for each. Or use an average monthly fixed cost if you want a single annual break-even. Seasonal businesses often track monthly break-even to catch slow months early.
Yes—calculate break-even for each product line separately if their costs and prices differ. If you sell a mix, you can find a blended break-even by treating the product mix as a weighted average contribution margin.
A low contribution margin (20% in this case) means you need to sell many units to cover fixed costs. It's not inherently bad, but it requires high volume and tight cost control. Review pricing power or variable cost reduction.
Recalculate whenever fixed costs, variable costs, or selling price change—or at least quarterly. In fast-moving businesses (e.g., digital products with subscription pricing), monthly reviews are wise.
No—break-even is pre-tax. Once you exceed break-even, you'll owe taxes on profit. For after-tax planning, divide target profit by (1 − tax rate) and add that to fixed costs to find your 'payoff point.'