Break-even Calculator
Find your break-even point
The Complete Guide to Break-even Analysis
Our Break-even Calculator provides a comprehensive analysis of your business’s financial performance. By inputting your fixed costs, variable cost per unit, and selling price per unit, you can determine the break-even point—the number of units needed to cover your costs—and assess your overall profitability.
What is Break-even Analysis?
Break-even analysis is a fundamental financial tool that helps businesses understand the minimum performance required to avoid losses. It identifies the point where total revenues equal total costs, ensuring that all expenses are covered.
Break-even Point (Units) = Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit)
How do we calculate the break-even point?
To calculate the break-even point, first determine the contribution margin by subtracting the variable cost per unit from the selling price per unit. Then, divide your fixed costs by this margin to find the number of units required to break even.
Contribution Margin = Selling Price per Unit - Variable Cost per Unit
This formula provides a clear understanding of the sales volume necessary for your business to cover its costs.
Break-even Analysis Guide
A thorough break-even analysis not only shows you when your business will start generating profit but also assists in making informed decisions regarding pricing, cost management, and sales targets.
- Determine the minimum sales volume needed to cover all fixed and variable costs.
- Assess the impact of changes in costs or pricing on your break-even point.
- Plan strategies to increase profit once the break-even point is surpassed.
Break-even Calculator FAQs
What is break-even analysis?
Break-even analysis determines the point at which total revenues equal total costs, allowing businesses to understand the minimum performance required to avoid losses.
How is the break-even point calculated?
The break-even point is calculated by dividing fixed costs by the contribution margin, where the contribution margin is the selling price per unit minus the variable cost per unit.
What is contribution margin?
Contribution margin represents the amount each unit contributes toward covering fixed costs after variable costs have been deducted. It is calculated as Selling Price per Unit minus Variable Cost per Unit.