Plan
Break-Even Analysis Calculator
Finds the volume at which contribution covers fixed cost, and how much headroom sits between that point and your planned volume.
How this calculation works
- Contribution margin per unit is price less variable cost per unit. It is what each incremental unit contributes toward fixed costs.
- Break-even units is fixed costs divided by contribution margin per unit. Break-even revenue is that volume multiplied by price.
- Target-profit mode adds the required profit to fixed costs before dividing, answering how much volume is needed to earn a specific number rather than merely to break even.
- Margin of safety is the gap between planned volume and break-even volume, expressed as a percentage of planned volume. It is the sales decline the plan can absorb before it starts losing money.
Conventions and edge cases
- A contribution margin of zero or below has no break-even point at any volume. The tool reports that rather than returning an enormous or negative number.
- Break-even assumes fixed costs stay fixed and variable cost per unit stays constant across the range. Both break down at the extremes — step costs and volume discounts are real.
- Costs must be classified as fixed or variable before the answer means anything. Semi-variable costs need splitting first.
Frequently asked questions
- What if contribution margin is negative?
- Then there is no break-even point. Every unit sold loses money before fixed costs are considered, so higher volume increases the loss. The tool flags this rather than returning a negative unit count, which would be arithmetically valid and economically meaningless.
- Is break-even calculated on units or revenue?
- Both, and they answer the same question in different currencies. Units divide fixed costs by contribution per unit; revenue multiplies that volume by price, or equivalently divides fixed costs by the contribution margin ratio.
- What is margin of safety?
- The distance between planned volume and break-even volume, as a percentage of plan. A margin of safety of 30% means sales can fall 30% below plan before the business moves into a loss. It is the single most useful output here for risk conversations.