Work out how many units you must sell before a product or business stops losing money. Add your expected sales to see the margin of safety, or a profit target to see the volume it needs.
Results are estimates for planning. Check the figures before you make a financial or health decision.
How the Break-even calculator works
The calculator first finds the contribution per unit: selling price minus variable cost per unit. This is what each sale contributes towards covering fixed costs.
- Break-even units = fixed costs ÷ contribution per unit, rounded up to a whole unit.
- Break-even revenue = break-even units × selling price.
- Contribution margin % = contribution per unit ÷ selling price.
- Margin of safety (if you enter expected sales) = expected units − exact break-even units, also shown as a share of expected sales.
- Target-profit units = (fixed costs + target profit) ÷ contribution per unit, rounded up.
It assumes one product, a constant price and a constant variable cost per unit, and that fixed costs stay fixed at every volume. If the price is not higher than the variable cost, there is no break-even point and the tool says so. Use figures before VAT and for the same period as your fixed costs.
Worked example
Using the default values in the calculator above:
| Input | Value |
|---|---|
| Fixed costs for the period | £12000 |
| Selling price per unit | £25 |
| Variable cost per unit | £10 |
| Expected sales (units), optional | 1200 |
| Target profit, optional | £6000 |
Break-even point: 800 units
| Contribution per unit | £15.00 |
|---|---|
| Contribution margin | 60% |
| Break-even (exact) | 800 units |
| Break-even sales revenue | £20,000.00 |
| Profit at expected sales | £6,000.00 |
| Margin of safety | 400 units (33.3% of expected sales) |
Tips and common mistakes
Keep the period consistent: if fixed costs are monthly, expected sales should be monthly too. Be honest about variable costs, because card fees, packaging, delivery and sales commission are easy to leave out. If you sell several products, use an average price and average variable cost, or run the calculator once per product. Fixed costs often step up at higher volumes (a bigger unit, another employee), so recheck the result if your plan changes a lot. A thin margin of safety means a small sales dip puts you into a loss.
Frequently asked questions
What is the break-even point?
It is the sales volume at which total revenue equals total costs, so profit is zero. Below it you make a loss; above it, each extra unit adds its contribution to profit.
What counts as a fixed cost and what is variable?
Fixed costs stay the same whatever you sell in the period, such as rent or insurance. Variable costs rise with each unit, such as materials, packaging and payment fees.
What is a good margin of safety?
There is no single figure. The larger it is as a share of expected sales, the more room you have if sales fall short. Compare it with how much your sales normally vary.
Guides that help
- Break-even point and profit margin: how to work them out
- VAT explained: adding and removing VAT
- Percentage change, increases and discounts