Break-even Analysis
Units and revenue needed to break even. Formulas: Margin per unit = Price − Variable cost; Break-even units = Fixed costs ÷ Margin per unit. Use this calculator to find the sales volume or revenue required to cover fixed and variable costs. Enter price, variable cost per unit, and fixed costs.
What is break-even?
Break-even is the point where total revenue equals total costs, and profit is zero. It tells you how many units (or how much revenue) you need to cover fixed and variable costs.
Why it matters
- Sets a baseline sales target for viability.
- Helps with pricing and cost structure decisions.
- Supports scenario planning for new products and channels.
How to calculate
Margin per unit = Price − Variable cost. Break-even units = Fixed costs ÷ Margin per unit. Break-even revenue = Break-even units × Price.
Example
Price $25.00, Variable cost $10.00, Fixed costs $100,000.00 ⇒ Margin per unit $15.00, Break-even units 6667, Break-even revenue $166,666.67.
Improvement ideas
- Increase price or reduce discounts to raise unit margin.
- Lower variable costs through vendor negotiation or process improvements.
- Spread fixed costs across more volume by bundling or upsell.
FAQ
Is break-even the same as payback? No—break-even looks at units and revenue; payback focuses on recovering CAC via gross profit.
Which costs count as fixed? Costs that don’t vary with units in the short term (e.g., salaries, rent).
Can break-even change over time? Yes—pricing, cost structure, and volume mix shift margins and fixed costs.