Results
Break-Even Point 500 units
Break-Even Revenue $25,000
Contribution Margin $20
Margin Ratio 40%
Break-Even Calculator
Calculate how many units you need to sell to cover your costs and reach profitability.
How Break-Even Analysis Works
Break-even analysis determines when revenue covers all costs:
- Contribution Margin = Price - Variable Cost per Unit
- Break-Even Units = Fixed Costs ÷ Contribution Margin
- Break-Even Revenue = Break-Even Units × Price
Sell more than break-even to generate profit.
Example
With $10,000 fixed costs, selling at $50/unit with $30 variable cost:
- Contribution margin: $20 per unit
- Break-even: 500 units ($25,000 revenue)
- Every unit above 500 generates $20 profit
FAQ
- What is the break-even point?
- The break-even point is where total revenue equals total costs. At this point, you have zero profit or loss.
- What are fixed costs?
- Fixed costs remain constant regardless of production volume: rent, salaries, insurance, equipment. They don't change if you sell more or less.
- What are variable costs?
- Variable costs change with production: raw materials, packaging, shipping, sales commissions. They increase as you produce more.
- How can I lower my break-even point?
- Reduce fixed costs, decrease variable costs per unit, or increase your selling price. Any of these will lower your break-even point.