Break-Even Analysis Calculator
Calculate your break-even point in units and revenue. See how many sales you need to cover fixed costs and start profiting.
How This Calculator Works
Calculation methodology and assumptions
Break-even point = Fixed Costs ÷ Contribution Margin per Unit. Contribution Margin = Price - Variable Cost per Unit. The break-even point is where total revenue equals total costs (fixed + variable). Beyond this point, each additional unit sold generates profit equal to the contribution margin.
How to Use This Business Calculator
- 1
Enter your revenue or sales figures
Input monthly or annual revenue. For break-even analysis, enter your product's selling price per unit. For profit margin analysis, enter total revenue and cost of goods sold.
- 2
Input your costs
Separate fixed costs (rent, salaries, insurance — don't change with sales volume) from variable costs (materials, shipping, commissions — scale with units sold).
- 3
Set your pricing
For break-even: enter the variable cost per unit and selling price per unit. The calculator determines how many units you need to sell to cover all fixed costs.
- 4
Review profitability metrics
The calculator provides gross margin (revenue minus COGS), operating margin (after operating expenses), and net margin (after all costs including taxes). Each reveals a different layer of profitability.
Example Calculation
Let's analyze a small e-commerce business.
A handmade candle business sells candles at $28 each. Variable cost per unit: $9 (wax, wicks, jars, fragrance, shipping). Fixed monthly costs: $2,400 (studio rent $1,200, Shopify + marketing $800, insurance $200, miscellaneous $200). Break-even point: $2,400 ÷ ($28 − $9) = 126 candles/month.
Result: Break-even: 126 candles/month ($3,528 revenue). At 200 candles/month: Revenue $5,600, COGS $1,800, Fixed Costs $2,400, Net Profit $1,400 (25% net margin). The contribution margin of $19/candle means every candle sold above 126 adds $19 directly to profit. Doubling price to $56 (with premium positioning) would cut break-even to 63 units.
What Affects Your Results
Fixed vs Variable Costs
Businesses with high fixed costs need higher volume to break even but become very profitable at scale. Low fixed costs mean faster break-even but less operating leverage.
Pricing Strategy
A 10% price increase with no volume loss drops directly to the bottom line. For most businesses, pricing is the most powerful profit lever — more impactful than cost cutting.
Cost of Goods Sold
COGS includes direct materials, labor, and manufacturing costs. Negotiate volume discounts with suppliers, optimize shipping, and reduce waste to improve gross margin.
Sales Volume
Operating leverage means that once fixed costs are covered, each additional unit sold generates profit at the contribution margin rate. This is why scale matters.
Operating Expenses
Marketing, rent, insurance, payroll, and admin costs eat into gross profit. Track operating expense ratio (OpEx / Revenue) — for healthy small businesses, aim for 20-35%.
Tips for Analysis Residents
- Know your contribution margin per product — it tells you exactly how much each sale contributes to covering fixed costs and generating profit.
- Gross margin above 50% is generally healthy for product businesses. Below 30% means pricing or COGS needs attention. Service businesses should target 60%+ gross margins.
- Check Analysis's business tax obligations. Beyond income tax, you may owe franchise tax, gross receipts tax, or Business & Occupation (B&O) tax depending on the state.
- Track margins monthly. If gross margin is declining, investigate whether COGS is rising (supplier prices, shipping costs) or if you're discounting too aggressively.
- Separate operating expenses from COGS in your bookkeeping. Mixing them masks your true product profitability and makes it harder to identify cost reduction opportunities.
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StateCalc Team
Editorial Team
The StateCalc team builds free financial calculators using data from official government sources including the IRS, U.S. Census Bureau, BLS, and state revenue departments. All formulas are validated by an automated test suite and cross-referenced against published data.
Our editorial standardsFrequently Asked Questions
What is a break-even analysis?
A break-even analysis determines the sales volume at which total revenue equals total costs. Below this point you're losing money; above it, you're profitable. It helps businesses set pricing, forecast profitability, and evaluate new product viability.
What is contribution margin?
Contribution margin is the selling price minus variable costs per unit. It represents the portion of each sale that contributes toward covering fixed costs and eventually generating profit. A higher contribution margin means fewer units needed to break even.
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