Break-Even Calculator — Units & Revenue to Cover Costs
How many units you must sell to cover your fixed costs — the break-even point in units and revenue, with the profit at any volume.
Break-even point
Profit at a sales volume
What break-even tells you
Before you can make money you have to cover what you spend simply by being open. The break-even point is the sales volume at which the two meet — the last unit sold at a loss and the first unit that tips the business into profit. Knowing it turns "we need more sales" into a concrete target: a number of units, and a revenue figure, that a plan can be measured against.
The calculation
| Step | Method | Example |
|---|---|---|
| Contribution per unit | price − variable cost | £10 − £6 = £4 |
| Break-even units | fixed costs ÷ contribution | £1,000 ÷ £4 = 250 units |
| Break-even revenue | units × price | 250 × £10 = £2,500 |
| Profit at n units | (n × contribution) − fixed costs | 500 × £4 − £1,000 = £1,000 |
Why the contribution per unit is the key number
Every sale carries a slice of money — the contribution — that is either consumed by fixed costs or falls through as profit. Below break-even, all of it is consumed; above, all of it is profit. That is why the profit at 500 units (250 past break-even) is exactly 250 × £4 = £1,000. Once you know the contribution, predicting profit at any volume is one multiplication.
Limits to keep in mind
Break-even assumes a fixed selling price and a straight-line variable cost, which holds only over a range. In reality you discount at volume, materials get cheaper in bulk, and fixed costs step up when you need more staff or space. Treat the break-even point as a target set from today's numbers, and re-run it when the underlying prices move.
Worked scenarios
| Fixed costs | Price | Variable cost | Contribution | Break-even | Revenue |
|---|---|---|---|---|---|
| 1,000 | 10 | 6 | 4 | 250 units | 2,500 |
| 5,000 | 40 | 25 | 15 | 334 units | 13,360 |
| 3,000 | 120 | 20 | 100 | 30 clients | 3,600 |
The second row is the one that surprises people: 333.3 units is not a sellable quantity, so the practical break-even is 334 — you cannot stop one-third of the way through a sale. Round up, always.
From units to a deadline
A break-even point of 334 units is not yet a plan; it becomes one when you attach a sales rate. At 40 units a month it takes 8.35 months, so month nine is when the business turns profitable — if the rate holds. That calculation exposes the assumption most business plans hide: the sales rate is not a constant, and early months are usually slower. Model two rates, a conservative and an optimistic one, and the break-even month becomes a range rather than a promise.
The same logic applies to a service business, where the “unit” is a client or a project. Fixed costs of 3,000 a month, an average fee of 120 and a delivery cost of 20 per client gives a contribution of 100 and a break-even of 30 clients — a number that is easy to compare with capacity, because thirty clients may already be more than one person can deliver.
What break-even does not tell you
It says nothing about demand. A break-even point of 334 units is only useful if the market will buy 334 at that price; if it will buy 200, the business loses money no matter how well the arithmetic is done. It also ignores timing: fixed costs are paid monthly while revenue arrives unevenly, so a profitable year can still run out of cash in February. Break-even is a threshold, not a cash-flow forecast — the loan, savings or overdraft that carries you to the threshold is a separate plan.
Finally, it assumes the cost split is meaningful. A cost that is fixed at 100 units and variable at 1,000 — packaging, seasonal staff, cloud usage — should be modelled in steps rather than forced into one category. When the split is genuinely mixed, run the calculation at two volumes and treat the difference as the range you are actually operating in.
Frequently asked questions
What is the break-even point?
The break-even point is the sales volume at which total revenue equals total costs, so you neither make a profit nor a loss. In units it is fixed costs divided by the contribution per unit (selling price minus variable cost). With £1,000 of fixed costs and a £4 contribution per unit you break even at 250 units.
What is contribution per unit?
It is what each sale leaves behind to pay off fixed costs, once the variable cost of that unit is covered: selling price − variable cost. If you sell something for £10 that costs £6 to make and ship, the contribution is £4. Every unit sold chips £4 off the fixed costs until they are gone.
What counts as a fixed cost and what as a variable cost?
Fixed costs do not change with how much you sell — rent, salaries, software subscriptions, insurance. Variable costs rise with each unit — materials, packaging, payment fees, per-order shipping. The split is not always clean (electricity has both parts), but the calculation only needs a sensible best estimate.
What happens if the selling price is below the variable cost?
Then every unit sold loses money, and no volume ever breaks even — selling more just deepens the loss. The calculator returns no break-even point in that case rather than a negative or infinite number, because the business model cannot reach break-even by volume at all.
How do I find the break-even revenue?
Multiply the break-even units by the selling price. Selling 250 units at £10 each means £2,500 of revenue to cover the £1,000 of fixed costs. Equivalently, divide fixed costs by the contribution margin ratio: £1,000 ÷ 0.4 = £2,500.
What is the contribution margin ratio?
Contribution per unit divided by the selling price — £4 ÷ £10 = 40% in the example. It is the share of every sales pound left to cover fixed costs, and it makes the revenue break-even a single division: fixed costs ÷ ratio. The ratio stays constant only while price and variable cost do, so recheck it after a price change.
How do I break even in months rather than units?
Divide the break-even units by the number of units you sell per month. At 250 units to break even and 50 sales a month, that is five months. The arithmetic is trivial; the assumption is not — it presumes the monthly rate holds from day one, which is why new businesses usually take longer than the division suggests.
Should fixed costs include the owner’s salary?
Yes, if the business needs that money to operate — an owner who is not paid is subsidising the business, not breaking even. The same applies to a fair market salary for unpaid family labour. Leaving them out produces a lower, flattering break-even point that no bank would accept.
How do taxes change the break-even point?
This calculator works in pre-tax terms, consistent with contribution accounting. Sales tax or VAT collected on behalf of the state should be excluded from the selling price, and income tax is applied to profit after break-even rather than changing the point itself. If you need an after-tax target, divide the desired profit by (1 − tax rate) and add it to fixed costs.
What if I sell several products?
The single-product formula does not apply directly. The usual approach is a weighted average contribution per unit based on the sales mix — if half the units carry £4 of contribution and half carry £10, the average is £7 — and then fixed costs ÷ £7 gives break-even units of the mix. A mixed business breaks even on the mix, not on any one product, so a change in what customers buy moves the point.
Is anything sent to a server?
No. Every calculation runs in your browser and nothing is uploaded.
Go deeper
Longer explanations of the problems this tool solves:
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