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Break-Even Calculator

Calculate your break-even point in units and revenue. Understand fixed costs, variable costs, and contribution margin.

$

Rent, salaries, insurance, etc.

$
$

Materials, shipping, etc.

Understanding Break-Even Analysis

Break-even analysis tells you how many units you need to sell to cover all costs and start making profit.

Break-Even Formula

Break-even Units = Fixed Costs ÷ Contribution Margin

Contribution Margin = Price - Variable Cost per Unit

Example

  • Fixed costs: $10,000/month (rent, salaries, etc.)
  • Price per unit: $50
  • Variable cost per unit: $20
  • Contribution margin: $30
  • Break-even: 10,000 ÷ 30 = 334 units

Using Break-Even Analysis

  • Pricing decisions: How price changes affect profitability
  • Cost control: Impact of reducing expenses
  • Sales targets: Minimum sales needed
  • Investment decisions: ROI on new equipment or hires

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Frequently Asked Questions

What is break-even point?

The number of units you must sell to cover all costs. Below this, you lose money. Above, you profit.

What is contribution margin?

Price per unit minus variable cost per unit. It's how much each sale contributes to covering fixed costs.

How do I lower my break-even point?

Reduce fixed costs, increase prices, or lower variable costs. Any of these reduces the units needed to break even.

What are fixed vs variable costs?

Fixed costs stay the same (rent, salaries). Variable costs change with production (materials, shipping).