Break-Even Calculator: How Many Units Do You Need to Sell?
Your break-even point is where sales just cover all your costs: no profit and no loss. Enter your fixed costs, the selling price and the variable cost per unit to find it, and add a profit target to see what is needed to make money.
Estimates for general information. This is not tax or accounting advice.
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From related categoriesHow to use this calculator
- Enter fixed costs for the period, such as rent and salaries.
- Enter the selling price of one unit.
- Enter the variable cost of one unit, such as materials and packing.
- Optionally enter a profit target.
- Read the break-even units and revenue.
The formula
Worked example
Fixed costs ₹60,000, price ₹150, variable cost ₹90: contribution is ₹60 a unit, so you break even at 1,000 units and ₹1,50,000 revenue. The contribution margin ratio is 40%. To earn ₹30,000 profit you need 1,500 units.
Understanding your result
Below break-even you make a loss, above it a profit. Every extra unit adds the contribution margin to profit. If the price is not higher than the variable cost, you can never break even, and the tool will tell you.
When to use it
- Test a new product or a new shop before launching.
- See the effect of a price change on required volume.
- Set realistic monthly sales targets.
In-depth guide
How price changes the break-even point
With fixed costs of ₹60,000 and a variable cost of ₹90 a unit, the table shows how the selling price moves the number of units you must sell.
| Selling price | Contribution a unit | Break-even units | Break-even revenue |
|---|---|---|---|
| ₹120 | ₹30 | 2000 | ₹2,40,000 |
| ₹140 | ₹50 | 1200 | ₹1,68,000 |
| ₹150 | ₹60 | 1000 | ₹1,50,000 |
| ₹160 | ₹70 | 858 | ₹1,37,280 |
| ₹180 | ₹90 | 667 | ₹1,20,060 |
How variable cost changes it
Keeping the price at ₹150, a rise in variable cost cuts the contribution and pushes the break-even point up quickly.
| Variable cost | Contribution a unit | Break-even units |
|---|---|---|
| ₹70 | ₹80 | 750 |
| ₹80 | ₹70 | 858 |
| ₹90 | ₹60 | 1000 |
| ₹100 | ₹50 | 1200 |
| ₹110 | ₹40 | 1500 |
Using break-even for decisions
- Set a sales target: units needed for a profit goal = (fixed costs + target profit) ÷ contribution.
- Test a price change before you make it.
- Judge whether a new shop, machine or hire can pay for itself at your realistic volume.
- Know your margin of safety: the gap between your expected sales and the break-even sales.
Fixed and variable costs
Fixed costs stay the same whatever you sell in the period, such as rent, salaries and loan interest. Variable costs rise with each unit, such as materials, packing and commission. Some costs are mixed, so split them in a way that fits your business.
Limits
The model assumes one product, a steady price and costs that behave as entered. If you sell several products, use a blended contribution. Costs that step up at certain volumes, such as a second shift, are not captured.
Assumptions and limits
Assumes costs stay fixed or per-unit constant at all volumes and that you sell a single product. Real costs may step up with volume.
Frequently asked questions
What is a fixed cost?
A cost that does not change with how much you sell in the period, such as rent.
What is a variable cost?
A cost that rises with each unit, such as raw material.
Why are the units rounded up?
You cannot sell part of a unit, so the next whole unit is the first one with no loss.
Can I use it for services?
Yes. Use billable hours or jobs as units.
What if I sell several products?
Use an average price and cost, or run it for each product with shared costs split.