What is contribution margin ratio?

Contribution margin divided by price — 40% in the example. Fixed costs ÷ that ratio also gives break-even revenue.

What if price is below variable cost?

There is no break-even; every sale adds to the loss.

Does it handle several products?

Only with a fixed sales mix and a weighted contribution margin.

How to calculate a break-even point

Break-even units are fixed costs divided by contribution margin per unit, which is price minus variable cost per unit. Multiply by price for break-even revenue.

Skip the maths and use the break-even calculator

The formula

Break-even units = fixed costs ÷ (price − variable cost per unit); break-even revenue = units × price.

Step by step

Total the fixed costs for the period.
Subtract variable cost per unit from price.
Divide fixed costs by that contribution margin.

Worked example

Fixed costs 20,000; price 50; variable cost 30

Contribution margin = 50 − 30 = 20
Units = 20,000 ÷ 20 = 1,000
Revenue = 1,000 × 50 = 50,000

Break-even is 1,000 units, or 50,000 in revenue.

Common questions

Calculators for this

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APA

Free Calculator. (n.d.). How to calculate a break-even point. https://freecalculator.tech/guides/how-to-calculate-break-even-point

MLA

"How to calculate a break-even point." Free Calculator, https://freecalculator.tech/guides/how-to-calculate-break-even-point.

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How to calculate a break-even point — Free Calculator, https://freecalculator.tech/guides/how-to-calculate-break-even-point