Break-Even Calculator
See how many units, and how much revenue, you need to cover fixed costs and reach your profit target.
How break-even is calculated
- Contribution margin per unit = selling price − variable cost per unit.
- Contribution margin ratio = contribution margin ÷ selling price.
- Break-even units = fixed costs ÷ contribution margin per unit.
- Break-even revenue = fixed costs ÷ contribution margin ratio.
- Units for a profit target = (fixed costs + profit target) ÷ contribution margin per unit.
Using it on a mix of products
Most plants sell more than one product, so use a weighted average price and variable cost based on your actual mix. If the mix shifts toward lower-margin work, your break-even point rises even when total sales hold steady. That's why we look at contribution by product and customer, not just in total. See pricing and margin analysis.
Frequently Asked Questions
What is the break-even point?
It is the sales level where revenue exactly covers your fixed costs and the variable cost of what you sold, so profit is zero. Every sale above it adds its contribution margin to profit.
What counts as a fixed cost for a manufacturer?
Costs that don’t change with volume in the short run: rent, salaried staff, insurance, depreciation, software and loan interest. Material, direct labor paid by the piece or hour, freight-out and commissions are usually variable.
What is contribution margin?
Price minus variable cost per unit. It is what each sale contributes toward fixed costs and profit. The contribution margin ratio is that amount as a percentage of price.
How do I use break-even for a pricing decision?
Change the price or variable cost and watch how the break-even volume moves. A small price cut can require a large jump in volume just to earn the same profit, which is why discounting needs care.
Get a finance partner in your corner
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