Break-Even Point

How much do you have to sell before you stop losing money? Fixed costs, the price and the cost of each unit decide it. Or turn it around: what price do you need to reach a profit target?

BusinessCostsPricing

Inputs

Input examples

Fixed costs stay the same however much you sell (rent, salaries, insurance). Variable costs come with every unit (materials, packaging, payment fees). Use the same period for fixed costs and sales, e.g. a month. Click Solve next to what you want to find. Expected sales are optional. For education only — not financial advice.

Currency

Fixed costs F — per period, €

Price per unit p — €

Variable cost per unit v — €

Break-even volume Q — units

Expected sales — optional, units per period

What is the Break-Even Point?

Every unit you sell brings in its price minus its variable cost: the contribution margin. That money first has to pay the fixed costs. The break-even point is the volume at which the contributions of all units together exactly cover the fixed costs; every unit after that is profit.

The chart shows it as the point where the revenue line crosses the total-cost line. A higher price or lower variable costs make the revenue line pull away faster and bring the break-even point closer.

contribution= price − variable cost

break-evenF / (p − v)

margin of safetyhow far sales can fall

p ≤ vyou never break even

Cost–Volume–Profit Chart

break-even

revenue

total cost

fixed costs

profit

loss

Result

Enter the values above

Profit at Different Volumes

your inputs

Units sold	Revenue	Total cost	Profit

Worked Techniques

Break-Even Volume

Divide the fixed costs by the contribution of one unit.

Example: a café with 6 000 a month fixed, coffee 3.50, ingredients 1.10: 2 500 cups a month.

Break-Even Revenue

When you sell many different products, work with the contribution margin ratio: the share of each euro of sales left after variable costs.

Example: 40% margin ratio, 20 000 fixed: 50 000 of sales.

Price for a Target

If you know how much you can sell, this is the price that earns the profit you want.

Example: 50 000 fixed, 12 per unit, 4 000 units, 10 000 profit: price 27.

Sources & Verification

References

P. W. Farris, N. T. Bendle, P. E. Pfeifer & D. J. Reibstein, Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, 3rd ed., Pearson, 2016 — Ch. 3 (Margins and Profits), Sec. 3.6 (Break-Even Analysis and Contribution Analysis).