Before you spend on stock, ads, or a shop, you need one number: how many sales it takes to cover your costs. That is what break-even means. Until you reach it, every sale is still paying back rent, tools, packaging, and the other fixed costs of the month. After it, each sale starts to add profit. This free calculator does the sums for you. Enter your fixed costs, your selling price, and what each sale costs you to fulfil, and it will show your break-even point in units and in revenue — no sign-up, no account, and no payment needed.
Break-even calculator
Free to use. No sign-up or account needed. Enter your numbers and press Calculate.
What is the break-even point?
The break-even point is the level of sales where your total revenue exactly covers your total costs. You have made no profit and no loss. Sell one unit less than that, and the month ends in the red. Sell one unit more, and you start to make a profit.
To work it out, split your costs into two groups. Fixed costs stay the same each month whether you sell ten units or a hundred — rent, software, insurance, and a basic salary, for example. Variable costs rise with every sale — materials, packaging, delivery, and payment fees. Your business model shapes both groups, so it helps to compare the types of business models before you settle your prices. For a fuller definition, see Investopedia’s explanation of the break-even point.
How do you calculate the break-even point?
Use three numbers, then follow the steps below. First, work out your contribution margin per unit by taking the variable cost per unit away from the selling price. That is the amount each sale contributes towards your fixed costs. Next, divide your fixed costs by that margin. The answer is the number of units you must sell to break even. Finally, multiply those units by your selling price to get your break-even revenue.
- Contribution margin per unit = selling price per unit − variable cost per unit
- Break-even units = fixed costs ÷ contribution margin per unit
- Break-even revenue = break-even units × selling price per unit
If you also have a profit target in mind, add it to your fixed costs before you divide. That gives you the units needed to reach that target, not just to cover your costs.
What is an example of a break-even calculation?
Say you run a small online shop. Your fixed costs are 50,000 a month, you sell each item for 1,000, and each item costs you 500 to buy, pack, and deliver. Here is how the numbers work out:
| Item | Amount |
|---|---|
| Fixed costs per month | 50,000 |
| Selling price per unit | 1,000 |
| Variable cost per unit | 500 |
| Contribution margin per unit | 500 (1,000 − 500) |
| Break-even units | 100 units (50,000 ÷ 500) |
| Break-even revenue | 100,000 (100 × 1,000) |
You need to sell 100 units a month, bringing in 100,000, just to cover your costs. Sell 99 and you lose money; sell 101 and you make a small profit. If you wanted a profit of 25,000 a month on top, you would need (50,000 + 25,000) ÷ 500 = 150 units. Try the same numbers in the calculator above and check that you get the same answer.
How can you lower your break-even point?
A lower break-even point means less pressure every month, and there are only three levers to pull: cut fixed costs, cut variable costs, or raise your price. Start with the costs you can control. Work from home instead of renting space, drop tools you barely use, and renegotiate with suppliers. That matters most when you are starting lean — see the guide to how to start an online business with no money.
- Cut fixed costs: cancel unused subscriptions, use free tools, and keep overheads low until sales are steady.
- Cut variable costs: buy materials in larger quantities, reduce packaging, or find a cheaper delivery option.
- Raise your price: a small increase can move your break-even point a long way, but only if customers still see the value.
- Sell more of what already works: focus on your best product instead of adding new ones too soon.
Price is the lever to handle with care. Raising it helps only if sales hold up. If you sell online, read the guide to how to start a profitable e-commerce business before changing prices, and if your main asset is a skill rather than stock, the guide to how to turn your skills into a profitable online business shows how service income can keep fixed costs low.
Is break-even the same as making a profit?
No. Breaking even means you have covered your costs and made nothing. Profit only starts after that point. That distinction matters, because a business can hit break-even every month and still never build savings, pay its founder properly, or fund growth. Treat break-even as the floor, not the goal.
It also matters what you count as a cost. If you pay yourself nothing, your break-even point will look low, but the business is really living off your unpaid time. Put a fair wage for yourself in your fixed costs, even at first, so the number is honest. That is one reason a service-based business model can look attractive — with little stock to buy, the variable cost per sale is often low — but your time is still a real cost, and it still needs to be covered.
Conclusion
Your break-even point turns a vague hope — “I hope this month covers itself” — into a clear monthly target. Work it out before you set prices, check it again whenever a cost changes, and aim past it, not just at it. Run your own numbers through the calculator above, then use the result to set a sales target you can actually plan around. For wider help with the money side of a small business, the US Small Business Administration guidance on managing your business is a useful place to continue.
Frequently Asked Questions
How many sales do I need to break even?
Divide your fixed costs by your contribution margin per unit — that is, your selling price minus your variable cost per unit. The result is the number of units you need to sell. Use the calculator above with your own figures to get the exact number.
What if my selling price is the same as my variable cost?
Then you never break even. Each sale contributes nothing towards your fixed costs, so no amount of sales will cover them. You need to raise your price, cut your variable cost, or both.
Can I break even if my fixed costs are zero?
In theory, yes — with no fixed costs, every sale above its variable cost is profit from the first unit. In practice, most businesses have at least some fixed costs, even if it is only software or a phone bill, so it is worth listing them properly rather than assuming they are zero.
Does break-even include my own time?
Only if you count it. If you leave your own wage out of fixed costs, your break-even point will look lower than it really is. Add a fair monthly amount for your time so the result reflects what the business must truly earn.
How often should I recalculate my break-even point?
Recalculate it whenever a fixed cost, a supplier price, or your selling price changes, and at least once a quarter. A break-even point based on last year’s costs can quietly mislead you for months.