Find the point where revenue covers all your costs
Your break-even point is the number of units you must sell, and the revenue you must earn, before a business stops making a loss. It equals fixed costs divided by contribution margin (selling price minus variable cost per unit). This free calculator works it out instantly, with a chart and your margin of safety.
Contribution margin = Selling Price per Unit - Variable Cost per Unit. This is the amount each unit sold contributes towards paying your fixed costs.
Break-Even Units = Fixed Costs / Contribution Margin. Break-Even Revenue = Break-Even Units x Selling Price per Unit. Contribution Margin Ratio = Contribution Margin / Selling Price per Unit. The units figure is shown rounded up to whole units, because you cannot sell part of a unit; the revenue figure uses the exact unrounded units.
If you enter your current sales volume, Margin of Safety = (Current Units - Break-Even Units) / Current Units. It tells you how far sales can fall before you start making a loss.
The contribution margin is $45 - $25 = $20 per unit, a ratio of 44.44%. Break-even units are $50,000 / $20 = 2,500 units, and break-even revenue is 2,500 x $45 = $112,500.
If you currently sell 3,000 units, your margin of safety is 500 units, worth $22,500 of revenue, or 16.67% of current sales.
The chart plots revenue and total cost against units sold, from zero up to twice the break-even volume. The two lines cross at the break-even point, marked on the chart. To the left of it you make a loss; to the right you make a profit.
The calculation assumes one product, a constant selling price and a constant variable cost per unit. Fixed costs are treated as fixed across the range shown. For businesses with several products, run each product separately or use an average price and cost.
It is the sales volume at which total revenue equals total costs, so profit is exactly $0. Sell more than the break-even units and you make a profit; sell fewer and you make a loss.
Divide your fixed costs by the contribution margin, which is the selling price minus the variable cost per unit. With $50,000 of fixed costs, a $45 price and a $25 variable cost, the contribution margin is $20, so break-even is 2,500 units.
Contribution margin is the selling price per unit minus the variable cost per unit. It is what each sale contributes towards covering fixed costs and then profit. The calculator also shows it as a percentage of the selling price.
Margin of safety is how far your current sales are above break-even, shown in units, in dollars and as a percentage of current sales. A higher percentage means sales can fall further before you make a loss. Enter your current sales volume to see it.
Then every unit sold loses money before fixed costs are even counted, so no break-even point exists. The calculator shows a message that the selling price must be greater than the variable cost per unit.
Yes. It is free to use, and you do not need to create an account to run it.
Built by Shihan Sheriff, FCMA (Fellow Chartered Management Accountant), VP of Finance at Nomod (a Y Combinator-backed fintech), CFO at Esanjo Ventures and founder of Money Master HQ (SS Coaching, LLC). Results are estimates for planning, not financial advice.