Home / Calculators / Break even calculator
Pricing, payment terms and cost
Break-even calculator: units you need to cover your costs
Enter fixed costs, the price per unit and the variable cost per unit. You get the break-even volume, break-even revenue and the units needed for a profit target.
Break-even units equal fixed costs divided by the contribution per unit, which is price minus variable cost. At the default numbers you break even at 4,545 units.
Written by Procurement VMS Editorial Team · Reviewed by Michael, Procurement Advisor Expert · Updated
Your numbers
The boxes start with an example so you can see how it works. Replace them with your own figures.
Your result
You need to sell 4,545 units, worth USD 113,636, to cover fixed costs. To earn USD 20,000 you need 6,364 units. Each unit sold leaves USD 11.00 toward fixed costs and profit.
| Contribution per unit | USD 11.00 |
|---|---|
| Break-even units | 4,545 units |
| Break-even revenue | USD 113,636 |
| Units needed for the profit target | 6,364 units |
| Contribution margin | 44.0% |
The currency box changes the label only. Enter amounts in the currency you choose.
Free PDF and Excel
Save this result as a PDF guide and an Excel model
Free to download. You enter your name, work email and phone number, and the files are ready at once.
- PDF guide with the formula, a worked example and a checklist of what to enter
- Excel model with live formulas, so your own numbers recalculate at once
- Ready at once after the form, with no account to create
The files open with the example numbers from the page. Type yours over the blue cells in the Excel file. The calculator on this page is free to use without a form.
How the break even calculator works
The formula
Break-even units = fixed costs / (price - variable cost per unit). Units for a target = (fixed costs + target profit) / (price - variable cost per unit).
Break-even tells you the volume at which a product, a contract or an investment stops losing money. It is useful in buying as well: a supplier that asks for tooling money up front is asking you to commit to a volume that covers it.
Contribution is the key idea. Each unit you sell contributes its price minus its variable cost toward the fixed costs. Once enough units are sold to cover the fixed costs, each further unit is profit.
The example numbers are illustrative and are not benchmarks. Use your own data for any decision.
How to use it with your own data
- List the costs that stay put whatever the volume, and add them up for the period.
- Work out variable cost per unit from a recent order, including freight and packing. The cost per unit calculator can help.
- Add a profit target to see the volume you need beyond break-even.
Mistakes that skew the answer
Treating a step cost as fixed
A second shift or a larger warehouse is fixed only up to a point. Recalculate when you cross it.
Ignoring discounts
If the real price after rebates is lower than list, use the real one.
Using last year numbers
Material and freight rates change. Use current quotes.
What to do with the result
Compare the volume you can reach with the break-even point before you sign a contract that includes tooling or minimum quantities. Check the payback of a larger investment in the payback period calculator, and see the make or buy decision guide for sourcing choices.
Questions about the break even calculator
What is a break-even point?
It is the volume or revenue at which total revenue equals total cost, so profit is zero.
Can I use it for buying decisions?
Yes. For example, you can compare the fixed tooling cost of a supplier with the saving in unit price, to see how many units pay back the tooling.
What is contribution margin?
It is the share of each sale left after variable costs. It goes toward fixed costs and then profit.
What if I sell several products?
Use a weighted average price and variable cost, or run the calculation per product and divide fixed costs sensibly.