The Finance AlgorithmTFA

Break Even Calculator

Calculator

Calculate your business break-even point — how much revenue you need to cover all costs. Essential for pricing, planning, and new venture viability.

Free to useNo data storedAI insightsUpdated: February 2026

The break-even point is where your revenue exactly equals your total costs — no profit, no loss. It's the minimum you need to sell just to keep the lights on. Every unit sold above break-even is profit; every unit below is a loss. This analysis is essential before launching a new product, setting prices, or deciding whether a business idea is viable. It also helps existing businesses understand the impact of cost changes or price adjustments.

Enter Your Details

Enter Your Details

$

Rent, salaries, insurance, loan repayments, subscriptions — costs that don't change with sales volume

$

Average price you charge per product or service

$

Cost of goods, materials, commissions, packaging — costs that vary with each sale

How many units/services you currently sell per month

$

How much profit you want to make above break-even

Real-World Examples

Coffee Shop

Monthly fixed costs: $20,000 (rent, staff, utilities). Average coffee price: $5.50. Variable cost per coffee: $1.80.

Contribution margin: $3.70 per coffee. Break-even: $20,000 ÷ $3.70 = 5,406 coffees/month = 180 coffees/day (30 days). At 250 coffees/day, profit = (250 - 180) × $3.70 = $259/day = $7,770/month.

E-commerce Store

Fixed costs: $8,000/month. Average order value: $65. Variable cost (product + shipping): $32.

Contribution margin: $33. Break-even: 243 orders/month = ~8 orders/day. If currently selling 350 orders/month, profit = (350 - 243) × $33 = $3,531/month. To hit $10,000 profit, need 546 orders/month.

Frequently Asked Questions

Glossary

Break-Even Point
The level of sales at which total revenue equals total costs. Below this point, the business makes a loss; above it, a profit.
Contribution Margin
Selling price minus variable cost per unit. The amount each sale 'contributes' toward covering fixed costs. Higher margin = faster path to profitability.
Fixed Costs
Business expenses that remain constant regardless of sales volume. Examples: rent, salaries, insurance, loan repayments.
Variable Costs
Business expenses that change proportionally with sales volume. Examples: raw materials, packaging, shipping, commissions.

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026

How to Use
  1. Enter your monthly fixed costs (rent, salaries, insurance, etc.).
  2. Input your average selling price per unit or service.
  3. Enter the variable cost per unit (materials, COGS, commissions).
  4. Optionally add your current sales volume and profit target.
  5. See your break-even point in units and revenue, plus contribution margin.
Key Information
  • Break-even formula: Fixed Costs ÷ (Price - Variable Cost) = units to break even.
  • The 'contribution margin' is (Price - Variable Cost) — the amount each sale contributes to covering fixed costs.
  • A higher contribution margin means you break even faster with fewer sales.
  • Break-even analysis assumes a linear relationship — in reality, you may get volume discounts or economies of scale.
Pro Tips
  • Run break-even analysis for different price points — a higher price needs fewer sales but may reduce volume.
  • Include ALL fixed costs: don't forget loan repayments, software subscriptions, insurance, and your own salary.
  • Use break-even to evaluate whether a price discount is worth it — if you drop price 10%, how many MORE units do you need to sell?
  • Calculate break-even for each product line separately — some products may be unprofitable and subsidised by others.
Avoid These Mistakes
  • Forgetting to include the owner's salary as a fixed cost — your time has value.
  • Not separating fixed and variable costs correctly — some costs are semi-variable (e.g., staff overtime).
  • Ignoring that variable costs may change at different volumes — bulk purchasing may reduce per-unit costs.
  • Using break-even as the sales target — break-even is the MINIMUM; your target should be well above it for profit.
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