Calculate break-even point in units and revenue
Break-Even Calculator is a free online browser-based utility designed to calculate break-even point in units and revenue. All computations, processing, and rendering happen completely inside your browser client, ensuring your data is kept secure and private.
Break-even units = fixed costs / (selling price per unit - variable cost per unit). With fixed costs of 50,000, a price of 50 and a variable cost of 30, the contribution is 20 per unit, so you need 50,000 / 20 = 2,500 units.
Break-even revenue = fixed costs / contribution margin ratio, where the ratio is (price - variable cost) / price. Here the ratio is 20 / 50 = 0.4, so revenue is 50,000 / 0.4 = 125,000, which equals 2,500 units x 50.
Break-even units is how many items you must sell to cover all costs; break-even revenue is the sales value at that point. They describe the same point: units x price = revenue. Units suit production planning, revenue suits sales targets.
Contribution margin is the selling price minus the variable cost per unit. It is the amount each sale contributes toward covering fixed costs and then profit. In the example, a price of 50 and variable cost of 30 leaves a contribution of 20 per unit, or 40% of the price.
Fixed costs stay the same however much you sell, such as rent, salaries and insurance. Variable costs change with each unit, such as materials, packaging and per-order shipping. Splitting them correctly is the biggest factor in an accurate break-even figure.
If the selling price is not higher than the variable cost, each sale loses money or earns nothing towards fixed costs, so no break-even point exists. Raise the price, cut variable costs, or both, until the price is above the variable cost per unit.
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