📊 Break-Even Point Calculator

Select Currency: Fixed Costs: Variable Cost per Unit: Selling Price per Unit:

Result:

How to Use This Break-Even Calculator

Using this online free break even calculator is very simple. Just follow these steps:

Step 1: Choose Your Currency

Select the currency in which your costs and prices are calculated (USD, AED, GBP, PKR, INR etc.).
This helps you keep all calculations consistent. If you don’t find your desired currency in the list. Ignore currency just focus on numbers.

Step 2: Enter Your Fixed Costs

These are costs your business must pay every month or year, even if your production is zero units.

Examples

Office/shop rent
Salaries
Insurance
Utilities
Loan payments

Enter the total amount in the box.

Step 3: Enter Variable Cost per Unit

This is the cost for producing one unit of your product.

Examples

Raw material cost
Packaging cost
Labor per unit
Electricity per unit

If you sell multiple products, use the cost of the product you are calculating for.

Step 4: Enter Selling Price per Unit

This is the amount you charge per product/unit.

Important Rule
Your selling price must be higher than variable cost.
Otherwise, you lose money on every unit sold.

Step 5: Click “Calculate”

The calculator will show you:

The number of units you need to sell to break even
The currency you selected

Understanding Each Term (Simple, Detailed Explanation)

Fixed Costs

These are expenses that do not change with production.
Even if you produce 1 unit or 10,000 units, fixed costs stay the same.

Examples:

Rent: $50,000/month
Salaries: $ 120,000/month
Internet + Utilities: $ 10,000

Why it matters:
Your business must recover this amount before earning profit.

Variable Cost per Unit

This cost increases with every unit produced.
If you produce 100 units, total variable cost = VC × 100.

Examples:

Raw material per unit = $200
Packaging = $20
Labour = $50

Total variable cost per unit = $270

Selling Price per Unit

This is what your customer pays for one unit.

Important:
Selling Price MUST be greater than Variable Cost.

Example:

Selling Price = $500
Variable Cost = $300
Profit contribution per unit = $200

Contribution Margin

This is the amount left from each sale after paying variable cost, which contributes to recovering fixed costs.

Formula:
Contribution Margin = Selling Price – Variable Cost

Example:

Selling Price = $500
Variable Cost = $300
Contribution Margin = $200

This means every unit you sell contributes $200 towards covering your fixed costs.

Break-Even Point (Units)

This is the most important value.
It tells you how many units you must sell to cover:

Fixed Costs
Variable Costs

After break-even, every additional unit becomes profit.

Formula:

Break-Even Units = Fixed Costs ÷ Contribution Margin

Example:

Fixed Costs = $100,000
Contribution Margin per unit = $200
Break-Even Units = 100,000 ÷ 200 = 500 units

So, you must sell 500 units to cover all your expenses.

Understanding Your Result (With Example)

Let’s say your result shows:

👉 Break-Even Point: 500 units (USD)

This means:

You must sell 500 units to avoid loss.
If you sell less, you are operating in loss.
If you sell more, you are generating profit.
The higher your contribution margin, the fewer units you need to sell.

Example:

If you sell 650 units:

Break-even = 500
Extra units = 150
Contribution margin = $200

Profit = 150 × 200 = $30,000

So selling just 150 units more than break-even earns $ 30,000 profit.

Why Break-Even Analysis Matters for Every Business

Helps you set the right selling price
Allows you to understand minimum sales targets
Guides business planning and budgeting
Helps in decision-making (buying machinery, hiring staff, expanding business)
Shows how profitable your business model is

Whether you run a small online store, a restaurant, a factory, or a freelance business—
Break-Even Analysis is essential for smart financial planning. For further business related terms definations you may click here

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