What if my price per unit is lower than my variable cost per unit?

There is no break-even point — every unit you sell loses money, and no volume of sales fixes that, since losses grow with volume instead of shrinking. The calculator flags this case directly rather than showing a negative or meaningless number.

Does this work for a service business, not just a physical product?

Yes — 'unit' can be a service engagement, a billable hour, a subscription, or any repeatable sale, as long as it has a consistent price and a variable cost per unit (or you're comfortable estimating one).

Why does the break-even point matter for a new business?

It's a core planning number for viability — it tells you the minimum sales volume needed just to avoid losing money, before financing decisions, pricing strategy, or growth targets even come into play.

Does the break-even point change if I sell more than one product?

Yes — this calculator models a single product or service with one price and one variable cost. A multi-product business should either compute a sales-weighted blended contribution margin across its product mix, or find a separate break-even point for each product.

Is break-even revenue the same as break-even units times price?

Yes exactly — break-even revenue is simply the break-even unit count multiplied by the price per unit, since that's the total revenue generated at exactly that sales volume.

Does this calculator account for taxes?

No — it's a pre-tax operating break-even based on fixed costs, price, and variable cost alone. Income taxes, loan principal payments, and other non-operating cash flows aren't part of the standard break-even formula and would need to be layered on separately.

What happens if I enter $0 for fixed costs?

The break-even point becomes 0 units — with no fixed costs to cover, any unit sold above variable cost is immediately profitable, so break-even is reached before any sales at all.

How is contribution margin percentage different from profit margin?

Contribution margin percentage only nets out variable costs from price, ignoring fixed costs — it shows how much of each sales dollar is available to cover fixed costs and then profit. Overall profit margin nets out all costs, including fixed costs, and can only be calculated after you know your total sales volume.

Break-Even Point Calculator

About the Break-Even Point Calculator

Calculates the break-even point for a single product or service — how many units you need to sell, and how much revenue that represents, before fixed costs are covered and every additional unit becomes profit.

100% Free Runs in Your Browser No Sign-Up Required

How to use it

Enter your Fixed costs — the total per period that doesn't change with sales volume (rent, salaries, insurance, loan payments, etc.).
Enter the Price per unit you charge for one unit of your product or service.
Enter the Variable cost per unit — materials, direct labor, shipping, or anything else that scales with each unit sold.
Read the break-even point in units and revenue, plus your contribution margin, in the result panel.

Formula

Contribution margin per unit = Price per unit − Variable cost per unit
Contribution margin % = Contribution margin per unit ÷ Price per unit × 100
Break-even point (units) = Fixed costs ÷ Contribution margin per unit
Break-even point (revenue) = Break-even units × Price per unit

Worked example

A business with $10,000 in fixed costs per month, a $50 price per unit, and a $30 variable cost per unit has a $20 contribution margin (40%) — it needs to sell 500 units, or $25,000 in revenue, to break even each month.

Profit/loss at nearby sales volumes (same $10,000 fixed cost / $50 price / $30 variable cost example)

Profit/loss at nearby sales volumes (same $10,000 fixed cost / $50 price / $30 variable cost example)
Units sold	Revenue	Total cost	Profit / loss
0	$0	$10,000	−$10,000
250	$12,500	$17,500	−$5,000
500 (break-even)	$25,000	$25,000	$0
750	$37,500	$32,500	$5,000
1,000	$50,000	$40,000	$10,000

Interpreting your result

This models a single product or service at a constant price and constant variable cost per unit — the standard simplified break-even formula used for business planning. A business selling multiple products with different margins doesn't have one break-even point; each product (or a sales-weighted blended margin across all of them) would need its own calculation. Treat this as a planning estimate, not an accounting result — it doesn't account for taxes, financing costs, or costs that are only partly fixed (semi-variable costs), which should be split into their fixed and variable portions before using this calculator.

Recommendations

• Lowering fixed costs and raising your contribution margin (price minus variable cost) both lower your break-even point — but they work differently: cutting fixed costs shrinks the numerator, while widening the margin shrinks the denominator, so a small margin improvement can outsize a similar-dollar fixed-cost cut at high volume.
• Break-even is the point of zero profit, not a target — once you're selling above the break-even volume, every additional unit contributes its full contribution margin straight to profit, since fixed costs are already covered.
• If you sell multiple products, compute a sales-weighted average contribution margin (or run this calculator per product) rather than plugging in a single blended price and cost that may not reflect your actual product mix.

Frequently asked questions

Fixed costs stay the same regardless of how many units you sell — rent, salaries, insurance, loan payments. Variable costs scale directly with each unit sold — raw materials, direct labor per unit, shipping, packaging. Some costs are semi-variable (a phone plan with a base fee plus usage charges) and should be split into their fixed and variable portions before using this calculator.

Related tools

Household Budget Calculator (50/30/20)

Net Worth Calculator

Self-Employment Tax Calculator

Investment ROI Calculator