Break-Even Calculator

What is a free break-even calculator online?

A free break-even calculator online tells you how many units of a product or service you need to sell — or how much revenue you need to earn — before your business covers all its costs and starts making a profit. It takes three inputs: your monthly fixed costs (rent, salaries, insurance, software), the price you charge per unit, and the variable cost per unit (materials, payment fees, delivery). From those, it calculates the contribution margin, the break-even units, the break-even revenue, and — if you enter an expected sales figure — the margin of safety.

This break-even calculator for small business goes beyond the textbook formula. It includes industry presets that load typical numbers for a restaurant, an e-commerce store, a SaaS product, a service business, a retail shop and a small manufacturer. It draws a visual break-even chart showing the total cost line, the revenue line and the crossover point. And it works out the margin of safety so you can see how much sales can fall before you start losing money. Everything runs in your browser — no sign-up, no account, no upload, no tracking.

How to use this free break-even analysis calculator

1. Optionally select an industry preset to load typical numbers for your sector — you can edit them afterwards.
2. Enter your monthly fixed costs. These are the costs you pay regardless of how much you sell.
3. Enter the price per unit and the variable cost per unit. The difference between them is the contribution margin.
4. Optionally enter an expected number of units per month to see your margin of safety.
5. Click Calculate break-even. The tool shows break-even units, break-even revenue, contribution margin, contribution margin ratio and a chart.

The break-even formula

The break-even point in units is calculated as:

Break-even units = Fixed costs ÷ (Price − Variable cost per unit)

The denominator is the contribution margin per unit — the amount each sale contributes towards covering fixed costs and then generating profit. Break-even revenue is simply break-even units multiplied by the price, or equivalently:

Break-even revenue = Fixed costs ÷ Contribution margin ratio

Where contribution margin ratio = (Price − Variable cost) ÷ Price.

Worked example

A small business has $10,000 of monthly fixed costs. It sells a product for $50 and the variable cost per unit is $30. The contribution margin is $20 per unit, or 40% of the price.

• Break-even units = $10,000 ÷ $20 = 500 units per month.
• Break-even revenue = 500 × $50 = $25,000 per month. Or $10,000 ÷ 0.40 = $25,000.
• Margin of safety (if the business expects to sell 750 units) = (750 − 500) ÷ 750 = 33%. Sales can fall by a third before the business starts losing money.

Contribution margin explained

The contribution margin is the single most important number in a break-even calculation. It tells you how much of each sale is available to cover fixed costs and then to become profit. Two businesses can have the same revenue but very different contribution margins:

High-margin businesses break even on much lower volume. A SaaS company with a 90% contribution margin needs far fewer customers to cover $10,000 of fixed costs than an e-commerce store with a 30% margin. This is why investors favour high-margin models — they scale faster because each incremental sale drops more profit to the bottom line.

Margin of safety

The margin of safety is the gap between your expected (or current) sales and the break-even point, expressed as a percentage. It answers the question: "How much can sales fall before I lose money?"

Margin of safety = (Expected sales − Break-even sales) ÷ Expected sales

An alternative version expresses it in units: "expected units minus break-even units". A margin of safety of 33% means sales can fall by a third before you start losing money. A margin of safety below 20% is a warning sign — the business is operating close to break-even with limited tolerance for a slow month.

Fixed vs variable costs

Getting the split right is the most common source of error. A cost is fixed if it does not change with the number of units sold, and variable if it does.

• Fixed costs: rent, salaried staff, insurance, software subscriptions, loan repayments, fixed utility base charges, accountant fees.
• Variable costs: raw materials, packaging, payment processing fees, delivery, hourly contractors, sales commissions, per-transaction hosting.
• Mixed costs: some costs, like utilities or delivery, have both a fixed and variable element. Split them into the fixed base and the variable per-unit portion.

Payroll is often misclassified. Salaried staff are a fixed cost; hourly workers who are scheduled in proportion to sales are variable. If a business has both, split the payroll line accordingly.

How to use break-even in pricing decisions

Break-even analysis is most useful when you are deciding on price. Two scenarios to model:

• Raise price by 10%. Contribution margin rises, break-even units fall. This is often the fastest way to improve profitability — and rarely requires the volume loss you might fear.
• Cut price by 10%. Contribution margin falls, break-even units rise. In low-margin businesses, a 10% price cut can double the break-even volume required. This is why price wars destroy profitability.

Run both scenarios in the calculator and compare the break-even units to your realistic expected sales volume. If the price cut requires 800 units but the market is only 600, the cut destroys value.

Limitations of break-even analysis

• Assumes constant price and cost. In reality, discounts, bulk material purchases and overtime all change the lines. Use break-even for a first pass, then model variability.
• Assumes a single product. A multi-product business needs either a weighted-average contribution margin or separate break-even calculations per product line.
• Ignores capacity limits. A factory that can only produce 400 units cannot break even at 500, no matter what the math says.
• Ignores cash timing. Break-even is a profit concept, not a cash concept. A business can be profitable on paper and still run out of cash if customers pay late.

Common mistakes

• Using revenue instead of contribution margin. Break-even is driven by the margin per unit, not the price.
• Misclassifying payroll. Salaried staff are fixed; hourly contractors tied to output are variable.
• Forgetting owner's salary. If the owner takes a monthly draw, that is a fixed cost of the business and belongs in the calculation.
• Ignoring tax. Break-even is normally calculated before tax. If you need a post-tax break-even, add the tax expense as a fixed cost.
• Not revising the model. Costs and prices change. Recalculate quarterly, not once at launch.

Frequently asked questions