Break-Even Calculator finds the sales volume and revenue needed to cover costs. It also estimates cash break-even, target-profit volume, margin of safety, planned profit, and operating leverage so you can evaluate pricing, cost, and volume decisions.
Enter cost and sales assumptions
Break-even formulas
Break-even Units = Fixed Costs ÷ Contribution per Unit
Break-even Revenue = Fixed Costs ÷ Contribution Margin Ratio
Cash Break-even Units = (Fixed Costs − Non-cash Fixed Costs) ÷ Contribution per Unit
Target-profit Units = (Fixed Costs + Target Profit) ÷ Contribution per Unit
Margin of Safety = (Planned Units − Break-even Units) ÷ Planned Units × 100%
Symbols and terms
| Symbol | Meaning | Role |
|---|---|---|
| P | Selling price per unit | Revenue per unit |
| V | Variable cost per unit | Cost that changes with volume |
| F | Total fixed costs | Costs to cover before profit |
| CM | P − V | Contribution per unit |
| QBE | Break-even quantity | Zero-profit sales volume |
| DOL | Degree of operating leverage | Sensitivity of profit to sales |
Worked example
A product sells for $75, variable cost is $40 per unit, and fixed costs are $35,000. Contribution is $35 per unit, so accounting break-even is 1,000 units or $75,000 of revenue. If $5,000 of fixed costs are non-cash, cash break-even is about 858 whole units. At 1,500 units, planned operating profit is $17,500 and the margin of safety is 33.33%. A $20,000 target profit requires approximately 1,572 whole units.
How to use break-even analysis
Use break-even analysis to test prices, negotiate supplier costs, set sales goals, compare business models, evaluate new equipment, and understand risk before launching a product. Run multiple scenarios instead of relying on one forecast.
Break-even results are most reliable within a relevant operating range where selling price, unit variable cost, sales mix, productivity, and fixed-cost capacity remain reasonably stable. A large change in volume may require additional staff, space, machinery, or discounts that change the assumptions.
Accounting versus cash break-even
Accounting break-even includes all fixed costs recognized for the period, including non-cash charges such as depreciation. Cash break-even removes identified non-cash fixed charges to show the approximate level at which operating cash revenue covers operating cash costs. Neither result replaces a complete cash-flow forecast.
Understanding operating leverage
At a profitable planned volume, degree of operating leverage equals total contribution margin divided by operating profit. A higher result means a small percentage change in sales can create a larger percentage change in operating profit—upward or downward. It is undefined at break-even and less useful when profit is negative.
Common mistakes
- Mixing annual fixed costs with monthly unit volume.
- Including fixed overhead in variable cost per unit.
- Rounding break-even units down.
- Assuming an unchanged sales mix for multiple products.
- Ignoring step-fixed costs and capacity limits.
- Treating cash break-even as a complete cash-flow forecast.
Frequently asked questions
Should break-even units be rounded up?
Yes, when only whole units can be sold. The calculator displays the next whole unit needed to fully cover costs.
Can break-even be negative?
With normal non-negative fixed costs, no. If selling price is not above variable cost, there is no finite profitable break-even point.
What is a good margin of safety?
There is no universal target. More uncertainty, operating leverage, seasonality, or customer concentration generally calls for a larger buffer.
How do taxes affect break-even?
This calculator estimates operating break-even before interest and income taxes. After-tax target planning requires an adjusted target-profit calculation.
Can I use this for services?
Yes. Define one service engagement, billable hour, visit, or subscription as the unit and estimate its variable cost consistently.
How to use this Break-Even Calculator
Enter your selling price, variable cost, fixed costs, planned volume, and target profit in the Break-Even Calculator. Select Calculate break-even to reveal the results, review each metric, then use Download PDF or Download Excel to keep a scenario. Reset restores the worked-example values.
Break-Even Calculator planning guide
The Break-Even Calculator helps owners compare accounting break-even, cash break-even, contribution margin, target-profit volume, margin of safety, and operating leverage in one place. Test several price and cost assumptions with the Break-Even Calculator because supplier changes, discounts, and capacity steps can materially change the answer. The Break-Even Calculator rounds required whole units upward so the displayed sales goal fully covers the selected costs.
Keep all inputs in the same period and use realistic incremental costs. The Break-Even Calculator is an educational planning tool, so reconcile its assumptions with your records and a full cash-flow forecast. For additional small-business planning guidance, review the U.S. Small Business Administration startup-cost guide. Return to the Break-Even Calculator whenever price, costs, or expected demand changes. The Break-Even Calculator also makes side-by-side scenario reviews easier, while the Break-Even Calculator export keeps each selected result available for discussion.
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Educational estimate: Validate assumptions with your accounting records and model multiple scenarios before making major operational or financing decisions.