Break-Even Point Calculator
Find the sales volume at which total revenue covers total cost.
What this calculator does
Fixed cost divided by the contribution each unit makes towards it. All figures are the organisation's own. No typical margin, price or cost structure is suggested.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Fixed costs for the period
- — number value.
- Selling price per unit
- — number value.
- Variable cost per unit
- — number value.
- Target profit (optional)
- — number value.
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Contribution margin per unit = Price − Variable cost per unit; Break-even units = Fixed costs ÷ Contribution margin per unit; Units for target profit = (Fixed costs + Target profit) ÷ Contribution margin per unit
Worked example
$50,000 of fixed cost, $80 price, $30 variable cost
1,000 units cover the fixed cost.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: OpenStax — Principles of Accounting, Volume 2: Managerial Accounting
Last reviewed:
Common questions
Formula, source and verification
Fixed cost divided by the contribution each unit makes towards it.
The question it answers: How many units must we sell before we stop losing money?
The formula
Contribution margin per unit = Price − Variable cost per unit; Break-even units = Fixed costs ÷ Contribution margin per unit; Units for target profit = (Fixed costs + Target profit) ÷ Contribution margin per unit
- F — Fixed costs
- (currency). Costs that do not change with volume in the period.
- P — Selling price per unit
- (currency). Price the organisation charges.
- V — Variable cost per unit
- (currency). Cost that varies directly with each unit.
- T — Target profit
- (currency). Optional profit the organisation wants.
Units: Currency per unit; units out.
What kind of calculation this is
Deterministic formula. The same inputs always give the same answer. The maths is fixed and does not depend on judgement.
Method
All figures are the organisation's own. No typical margin, price or cost structure is suggested.
Published alternatives
More than one published form of this calculation exists. Each one assumes something different, so the right one depends on your situation.
Break-even in units (used by default)
Units = (Fixed costs + Target profit) ÷ (Price − Variable cost)
Use it when: Use when price and variable cost per unit are known and stable.
It assumes: Price and variable cost per unit do not change with volume.
Break-even in revenue
Revenue = (Fixed costs + Target profit) ÷ Contribution margin ratio
Use it when: Use when the product mix, and therefore the average margin ratio, is stable.
It assumes: The sales mix stays the same as volume changes.
Assumptions built into the result
- Business: Price and variable cost per unit stay constant across the volume considered.
- Business: Costs split cleanly into fixed and variable.
Figures this calculator will never guess for you
- No industry margin, benchmark price or assumed cost ratio.
Limitations
- A single-period, linear model. It does not handle volume discounts, step costs or changing mix.
Source and version
- Standard or reference
- Cost-volume-profit analysis (OpenStax, Principles of Accounting Volume 2: Managerial Accounting, cost-volume-profit analysis.)
- Published source
- OpenStax — OpenStax (CC BY)
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
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