Break-Even Point Calculator
Enter the period’s fixed cost, variable cost per unit and selling price to instantly see how many units you must sell just to cover costs. The widget also shows the contribution margin per unit, contribution ratio, units needed to hit a target profit, and the margin of safety against your forecast volume — useful when pricing a cafe menu, an Etsy product, a SaaS plan or any small-business launch.
Check the inputs: fixed cost and variable cost must be ≥ 0, selling price must be > 0, and any optional target profit / expected units must be ≥ 0.
Break-even units
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Break-even revenue
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Contribution / unit
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Contribution ratio
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Reach target profit
- Units for target
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- Revenue for target
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Margin of safety (expected vs break-even)
- Expected profit
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- Safety units
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- Safety ratio
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Gross-profit view (CVP model) — assumes fixed/variable costs and price stay constant in the relevant range and that everything produced is sold.
Formula
Contribution margin CM = Price P − Variable cost V Contribution ratio CMR = CM ÷ P Break-even units Q* = Fixed cost F ÷ CM Break-even revenue R* = Q* × P = F ÷ CMR Target-profit units Qt = (F + Target T) ÷ CM Profit at Q π = CM × Q − F Margin of safety MoS = (Expected − Q*) ÷ Expected
- · CVP (cost-volume-profit) model — gross figures only, before tax and one-off non-operating items.
- · When price ≤ variable cost (i.e. CM ≤ 0) there is no break-even point — every extra unit deepens the loss. The widget will flag this and ask you to revisit pricing.
- · Fixed cost F and expected / target sales must all refer to the same period — do not mix “annual rent” with “monthly sales”.
- · Break-even units are usually fractional; we show the ceiling (next whole unit) too, since you cannot actually sell 33.4 units.
- · A margin of safety above ~25 % is generally considered comfortable; close to 0 % means a small slip already pushes you into a loss.
- · Sources: Garrison / Noreen / Brewer, “Managerial Accounting” (17th ed., 2020), §6 “Cost-Volume-Profit Relationships”; HKDSE BAFS syllabus, CVP analysis section.
Frequently asked
What is the difference between contribution margin and gross profit margin?
Gross margin is a financial-reporting measure: revenue minus cost of goods sold (which already includes allocated fixed production cost). Contribution margin deliberately strips out fixed-cost allocation and uses only price minus directly variable cost. That separation is the whole point of break-even analysis — you want to see how much each extra unit contributes toward covering the fixed cost block, so you can answer "how many do I need to sell?" cleanly.
Can I still use this if I sell more than one product?
Yes — compute a weighted-average contribution margin first. Weight each product's CM by its expected share of total units (or total revenue, if you weight CMR instead) and feed that weighted number into the calculator. Textbooks call this the sales-mix assumption: as long as the product mix stays stable, multi-product CVP reduces to the single-product formula. Alternatively, run each product line separately to see its own break-even.
The result says I need hundreds of units but I am only selling tens — should I shut down?
Not necessarily. Break-even is a snapshot of one period and ignores brand-building, repeat customers and future mix changes. Short-term levers: (1) lower fixed costs (smaller space, work-from-home, co-working); (2) raise price — depends on elasticity, easier for differentiated products; (3) reduce variable cost (new supplier, bulk buying); (4) plug a target-profit number in to see what volume your dream profit actually requires. If actual sales sit well below Q* period after period, the business model itself probably needs to change.
Why does the price have to exceed variable cost?
Because contribution margin CM = P − V must be positive for there to be any way of recovering fixed cost. If P ≤ V, every extra unit just deepens the loss; the formula Q* = F / CM blows up to ∞ or flips negative — mathematically the break-even point is unreachable. The only real fixes are raising the price, lowering V, or changing product. The widget flags this case immediately so you don't mistake the "infinite answer" for a bug.
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