Calculate how many units you need to sell before your business starts making a profit.
A break-even point is the number of units your business needs to sell before your total revenue equals your total costs. At this point, your business has covered all fixed and variable expenses but has not yet made a profit.
Once you sell more than your break-even point, every additional sale contributes toward your profit. Knowing your break-even point helps you make informed decisions about pricing, budgeting, sales targets, and business planning.
Break-Even Point = Fixed Costs ÷ (Selling Price − Variable Cost)
The contribution margin is the amount each sale contributes toward covering your fixed costs. Once your fixed costs are covered, the remaining contribution becomes profit.
Fixed Costs: $10,000
Selling Price: $50 per unit
Variable Cost: $20 per unit
Contribution Margin: $30 per unit
Break-Even Point: 334 Units
In this example, the business needs to sell approximately 334 units before it begins generating profit.
A break-even point is when your total revenue equals your total costs. At this stage, your business is not making a profit or a loss.
Knowing your break-even point helps you set sales targets, determine pricing strategies, control costs, and understand how much you need to sell before earning a profit.
Fixed costs are expenses that stay the same regardless of how many products or services you sell, such as rent, salaries, insurance, and software subscriptions.
Variable costs change based on production or sales volume. Examples include materials, shipping, packaging, and sales commissions.
Yes. Whether you run a retail store, online business, service company, or startup, the break-even formula works as long as you know your fixed costs, selling price, and variable costs.
Continue learning with practical guides, calculators, and resources designed to help you grow your business.
A complete step-by-step guide with examples and practical tips.
Read Guide → ArticleUnderstand the difference and when each metric should be used.
Read Article → LibraryExplore our growing collection of free business calculators and generators.
View Tools →