How to Calculate Your Break-Even Point (Formula + Example)

Your break-even point is the number of units (or revenue) at which total profit is exactly zero — where sales finally cover all your costs. The formula is break-even units = fixed costs ÷ (price per unit − variable cost per unit). Here's how to work it out, with a free break-even calculator.

The break-even formula

Break-even units = fixed costs ÷ contribution margin per unit, where contribution margin = selling price − variable cost per unit. If fixed costs are $10,000, each unit sells for $50 and costs $30 to make, you break even at 10,000 ÷ ($50 − $30) = 500 units. The Break-Even Calculator does it for you.

Fixed vs variable costs

• Fixed costs don't change with volume — rent, salaries, software.
• Variable costs scale per unit — materials, shipping, payment fees.

The gap between price and variable cost (your contribution margin) is what pays down fixed costs and then becomes profit.

Why it matters

Break-even tells you the minimum you must sell to avoid a loss — essential before launching a product, signing a lease, or running a campaign. Pair it with your profit margin to see how quickly you move from covering costs to real profit.

Bottom line

Divide fixed costs by the per-unit contribution margin to find the units you must sell to break even. Calculate your break-even free, then set targets above it.