Break-Even Calculator
Use your own numbers after reviewing the formula and worked example.
Quick answer
Break-even occurs when total contribution from units sold equals fixed costs.
Formula or method
Keep units, percentages and time periods consistent. The formula is useful as a transparent check on the calculator result and helps explain why changing one input changes the answer.
Step-by-step
- Calculate contribution per unit.
- Add fixed costs for the period.
- Divide fixed costs by contribution.
- Round up to whole units.
Worked example
With $20,000 fixed cost, $50 price and $30 variable cost, contribution is $20 and break-even is 1,000 units.
How to interpret the result
Break-even is a simplified planning model; real operations can have multiple products and changing costs.
When the answer is used for a purchase, loan, payroll decision, construction order, school grade, health estimate or other real-world choice, verify the assumptions that matter in that context. Accurate arithmetic still depends on accurate inputs.
Common mistakes
- Using margin percentage instead of dollar contribution.
- Forgetting variable selling costs.
- Rounding down units.
Frequently asked questions
What if variable cost exceeds price?
Contribution is negative and the product cannot cover fixed costs under those inputs.
How do I estimate break-even revenue?
Multiply break-even units by price.
Does break-even equal positive cash flow?
Not necessarily.