Profit and pricing
Break-even calculator
Find the break-even point in units and in sales from your fixed costs, price and variable cost per unit. Below it: the units for a target profit, and the conversion rate and traffic you need to break even.
Units and sales
The break-even point in units and in revenue, with the contribution margin.
Target profit
The units, or the price, you need for the profit you want.
Traffic angle
The conversion rate and visitors you need to break even.
Break-even point calculator
Free, no sign-up, any currency. Use the same period for every number: fixed costs for a month go with sales for a month. The result updates as you type, and nothing you type leaves your browser.
Break-even point
480 units
Contribution margin per unit: 60 - 35 = 25.
Contribution margin ratio: 25 ÷ 60 = 41.67%.
Break-even units: 12,000 ÷ 25 = 480 units.
Break-even sales: 480 × 60 = 28,800 of revenue.
Margin of safety: 600 - 480 = 120 units, 7,200 of revenue or 20.00% of expected sales: sales can fall that far before you make a loss.
Profit at 600 units: 600 × 25 - 12,000 = 3,000.
Formula
contribution margin = price - variable cost per unit
break-even units = fixed costs / contribution margin
break-even sales = fixed costs / (contribution margin / price)
margin of safety = expected units - break-even unitsShort answer
A break-even calculator finds how many units you must sell to cover your costs. Divide fixed costs by the contribution margin per unit, which is the price minus the variable cost per unit. With fixed costs of 12,000, a price of 60 and a variable cost of 35, break-even is 12,000 ÷ 25 = 480 units, or 28,800 of sales.
- Break-even units = fixed costs ÷ (price per unit - variable cost per unit).
- Break-even sales = fixed costs ÷ contribution margin ratio, where the ratio is the contribution margin divided by the price.
- The margin of safety is how far expected sales can fall before you make a loss.
- For a target profit, add it to the fixed costs before you divide: (fixed costs + target profit) ÷ contribution margin.
- Divide the orders you need by your visitors to get the conversion rate you need to break even on the traffic you already have.
Target profit calculator
The units and sales you need for a profit you choose, and the price that gets you there at the volume you plan.
Units for your target profit
680 units
Units needed: (12,000 + 5,000) ÷ 25 = 680 units.
Sales needed: 680 × 60 = 40,800 of revenue.
That is 200 units above the break-even point of 480.
Price for 5,000 of profit at 600 units: 35 + 17,000 ÷ 600 = 63.33.
Price to break even at 600 units: 35 + 12,000 ÷ 600 = 55.
Formula
units for target = (fixed costs + target profit) / contribution margin
price for target = variable cost + (fixed costs + target profit) / unitsHow do you calculate the break-even point?
To calculate the break-even point, divide your fixed costs by the contribution margin per unit, which is the price of one unit minus its variable cost. The answer is the number of units that covers every cost, with nothing left over. With fixed costs of 12,000, a price of 60 and a variable cost of 35, it is 12,000 ÷ 25 = 480 units.
contribution margin per unit = price - variable cost per unit
contribution margin ratio = contribution margin per unit / price
break-even point (units) = fixed costs / contribution margin per unit
break-even point (sales) = fixed costs / contribution margin ratioBelow the break-even point every period ends in a loss; above it, each extra unit adds its whole contribution margin to profit. The break-even point in sales is the same point counted in revenue instead of units: 480 units × 60 = 28,800, which is also 12,000 ÷ 41.67%.
How to use the break-even calculator
- Pick a period. A month is the usual choice. Every number you enter must cover the same period.
- Add up your fixed costs for that period: the costs you pay whether you sell one unit or a thousand.
- Enter the price and the variable cost of one unit. The variable cost is everything that comes with each sale.
- Add your sales forecast if you have one, to see the margin of safety and the profit at that volume.
- Check the conversion rate you need. The conversion rate to break even calculator turns the units into the orders, and the share of your visitors, that you need.
What are fixed costs and variable costs?
Fixed costs are the costs that stay the same in a period however much you sell, such as rent, salaries and software. Variable costs rise with every unit you sell, such as the product itself, packaging, shipping and payment fees. A break-even calculator needs the two kept apart, because only variable costs come off each sale.
Some costs could go in either column. Put each one where it behaves in your business, and put it in only one.
| Cost | Usually | Why |
|---|---|---|
| Rent, salaries, insurance | Fixed | Paid in full whether you sell or not. |
| Software and app subscriptions | Fixed | A set monthly fee. Move a fee charged per order to variable. |
| Product or materials, packaging | Variable | Every unit sold needs its own. |
| Shipping you pay for | Variable | Charged per order or per parcel. |
| Payment processing fees | Variable | A percentage of each sale, often plus a fixed fee per transaction. Work it out on the price of one unit. |
| Ad spend | Either | A set budget for the period is fixed. A cost you pay per order is variable. |
| Sales commissions | Variable | A share of each sale. |
For the fee on a sale, the Stripe fee calculator and the PayPal fee calculator give the amount for one price; add it to the variable cost per unit.
Break-even calculator examples, worked step by step
The examples below are made up to show the arithmetic. They are not typical costs, prices or margins for any kind of business.
An online store selling one product
- Fixed costs for the month: 12,000. Price: 60. Variable cost per unit: 35.
- Contribution margin: 60 - 35 = 25 a unit, a ratio of 41.67%.
- Break-even point: 12,000 ÷ 25 = 480 units, or 480 × 60 = 28,800 of sales.
- With 600 units forecast, the profit is 600 × 25 - 12,000 = 3,000.
A service business
A studio with fixed costs of 4,500 a month sells a service for 150; each one costs 60 in contractor time and tools. Its contribution margin is 150 - 60 = 90 (60.00%), so it breaks even at 4,500 ÷ 90 = 50 sales, 7,500 of revenue.
When the answer is not a whole number
At a price of 61, the store above has a margin of 26 and a break-even point of 12,000 ÷ 26 = 461.54 units. Round up to 462: after 461 sales the store is still 14 short, and sale 462 takes it to a profit of 12.
A break-even table
A break-even chart plots revenue and total costs against units sold; the lines cross at the break-even point. The table shows the same numbers for the store in the first example.
| Units sold | Revenue | Total costs | Profit | Result |
|---|---|---|---|---|
| 0 | 0 | 12,000 | -12,000 | Loss |
| 240 | 14,400 | 20,400 | -6,000 | Loss |
| 480 | 28,800 | 28,800 | 0 | Break-even |
| 600 | 36,000 | 33,000 | 3,000 | Profit |
| 720 | 43,200 | 37,200 | 6,000 | Profit |
| 960 | 57,600 | 45,600 | 12,000 | Profit |
What is the margin of safety?
The margin of safety is how far your expected sales sit above the break-even point: the amount sales can fall before you make a loss. Subtract the break-even units from the expected units, then divide by the expected units for a percentage. The store expecting 600 units has a margin of safety of 120 units, or 20.00%.
margin of safety (units) = expected units - break-even units
margin of safety (%) = (expected units - break-even units) / expected unitsIn revenue, that is 36,000 of expected sales against 28,800 at break-even, a cushion of 7,200. If expected sales are below break-even, there is no margin of safety, and the calculator shows the shortfall and the loss instead.
How many units do you need to sell to make a profit?
To find the units you need for a target profit, add the profit to your fixed costs and divide by the contribution margin per unit. The store wanting 5,000 of profit needs (12,000 + 5,000) ÷ 25 = 680 units, 200 more than break-even, and 40,800 of sales.
The same sum can solve for the price. If the store expects to sell 600 units, it needs a price of 35 + 17,000 ÷ 600 = 63.33 to earn 5,000, and 55 just to break even. The target profit calculator above does both. A higher price only helps if the same number of people still buy, which is where the conversion rate comes in.
What conversion rate do you need to break even?
The conversion rate you need to break even is the orders you need divided by the visitors you get in the same period. A store that must sell 480 orders a month and gets 30,000 visitors needs 480 ÷ 30,000 = 1.60% of them to buy. Below that rate, the traffic you already have cannot cover your costs.
Conversion rate to break even calculator
Turns the break-even point into orders, then into the conversion rate you need on your traffic and the traffic you need at your conversion rate.
Conversion rate to break even
1.60%
Break-even: 480 units, so 480 orders at one unit per order.
Conversion rate needed: 480 ÷ 30,000 visitors = 1.60%.
At your 1.5%: 30,000 × 1.5% = 450 orders, a loss of 750.
Visitors needed at 1.5%: 480 ÷ 1.5% = 32,000.
To break even on today's traffic, the conversion rate has to rise from 1.5% to 1.60%, a relative lift of 6.67%.
Formula
orders to break even = break-even units / units per order
conversion rate to break even = orders to break even / visitors
visitors to break even = orders to break even / conversion rateWorked example: the same store, seen as traffic
- Break-even is 480 units, and each order is one unit, so the store needs 480 orders a month.
- It gets 30,000 visitors a month and converts 1.5% of them: 450 orders, a loss of 750.
- To break even on the same traffic it needs a conversion rate of 480 ÷ 30,000 = 1.60%, a relative lift of 6.67%.
- At its current 1.5%, it would need 480 ÷ 1.5% = 32,000 visitors, 2,000 more than it gets now.
Both routes reach the same break-even point. More traffic usually costs money, and that cost raises the break-even point again. A higher conversion rate on the traffic you already pay for does not. The table shows how the price changes the rate this store needs on its 30,000 visitors, if the conversion rate holds at each price.
| Price | Contribution margin | Margin ratio | Break-even units | Break-even sales | Conversion rate needed |
|---|---|---|---|---|---|
| 55 | 20 | 36.36% | 600 | 33,000 | 2.00% |
| 60 | 25 | 41.67% | 480 | 28,800 | 1.60% |
| 65 | 30 | 46.15% | 400 | 26,000 | 1.33% |
| 70 | 35 | 50.00% | 343 | 24,000 | 1.14% |
Measure the rate you have today with the conversion rate calculator. To find what is stopping visitors from buying, Convertica's free CRO audit runs eight checks on the page they land on, scores each out of 100 and gives you three fixes.
How to calculate the break-even point in Excel or Google Sheets
To calculate the break-even point in Excel or Google Sheets, put fixed costs in B1, the price in B2 and the variable cost per unit in B3, then divide fixed costs by the difference: =B1/(B2-B3). Wrap it in ROUNDUP to get whole units. The same formulas work in both programs.
| To get | Formula | Result |
|---|---|---|
| Contribution margin per unit | =B2-B3 | 25 |
| Contribution margin ratio | =(B2-B3)/B2 | 41.67% |
| Break-even units, whole | =ROUNDUP(B1/(B2-B3),0) | 480 |
| Break-even sales | =B1/((B2-B3)/B2) | 28,800 |
| Margin of safety | =(B4-B1/(B2-B3))/B4 | 20.00% |
| Profit at expected units | =B4*(B2-B3)-B1 | 3,000 |
Excel also has Goal Seek (Data, What-If Analysis, Goal Seek): set the profit cell to 0 by changing the units cell, and it finds the break-even point from whatever profit formula your sheet already has. In Google Sheets, use the formulas in the table.
What does break-even analysis leave out?
Break-even analysis assumes the price, the variable cost per unit and the fixed costs stay the same at every volume. Real businesses bend those rules, so read the answer as a line to plan around, not a forecast.
- Several products. With more than one product, use the break-even point in sales with your overall contribution margin ratio. It holds only while the mix of products you sell stays the same.
- Costs that step up. A second warehouse or another hire raises fixed costs at a certain volume, so the break-even point jumps with it.
- Prices that move. Discounts lower the price per unit and the margin with it. The discount calculator shows how many more units a discount needs.
- Timing. Break-even counts profit, not cash. Stock bought ahead, payment terms and refunds can leave you short of cash while the sums say you are past break-even.
Break-even point, break-even ROAS or margin: which do you need?
The break-even point covers a whole period, with fixed costs. Other break-even numbers answer narrower questions about one sale or one channel. Use the one that matches the decision in front of you.
| Question | Number | Calculator |
|---|---|---|
| How many sales cover all my costs this month? | Break-even point | This page |
| What return must my ads make to pay for themselves? | Break-even ROAS | Break-even ROAS calculator |
| What do I keep from each sale, as a percentage? | Profit margin | Margin calculator |
| What should I charge on top of my cost? | Markup | Markup calculator |
| What did I actually make after every cost? | Gross, operating and net profit | Profit calculator |
Related calculators
The break-even point is built from your price and your costs. These calculators work on the pieces.
See all free tools and how they fit together.
Break-even calculator FAQ
How does a break-even calculator work?
A break-even calculator divides your fixed costs by the contribution margin per unit, which is the price minus the variable cost of one unit. The result is the number of units you must sell to cover every cost. With fixed costs of 12,000 and a margin of 25 a unit, that is 480 units. Multiply by the price to get break-even sales.
What is the break-even point formula?
Break-even point in units = fixed costs ÷ (price per unit - variable cost per unit). Break-even point in sales = fixed costs ÷ contribution margin ratio, where the ratio is (price - variable cost) ÷ price. Both give the same answer: 480 units at a price of 60 is 28,800 of sales.
How do I calculate the break-even point in sales dollars?
Divide fixed costs by the contribution margin ratio. If each unit sells for 60 and costs 35 to make, the ratio is 25 ÷ 60 = 41.67%, and fixed costs of 12,000 need 12,000 ÷ (25 ÷ 60) = 28,800 of sales. This is the formula to use when you sell many products at different prices and know your overall margin ratio.
What is contribution margin?
Contribution margin is what each sale leaves after its own variable costs, to pay fixed costs and then make a profit. Per unit it is the price minus the variable cost: 60 - 35 = 25. As a ratio it is that margin divided by the price: 41.67%. It differs from gross margin, which subtracts only the cost of goods sold.
What is a good break-even point?
There is no good break-even point in general: it depends on what you can realistically sell. Compare the break-even units with the sales you expect. The gap between them is your margin of safety. A business that expects 600 units and breaks even at 480 can lose 20% of its sales before it makes a loss.
How can I lower my break-even point?
There are three levers: cut fixed costs, raise the price, or lower the variable cost per unit. Each one changes the break-even point directly. Raising the price from 60 to 65 lifts the margin from 25 to 30 and cuts break-even from 480 to 400 units, if you can still sell at the higher price.
Is ad spend a fixed or a variable cost?
It depends on how you spend it. A set monthly budget behaves like a fixed cost for that month, so add it to fixed costs. If you pay per order, for example a commission or a steady cost per acquisition, it rises with sales, so add the cost per order to the variable cost of each unit.
What conversion rate do I need to break even?
Divide the orders you need to break even by the visitors you get in the same period. If break-even is 480 orders and the store gets 30,000 visitors a month, it needs a conversion rate of 480 ÷ 30,000 = 1.60%. At a conversion rate of 1.5% it would need 32,000 visitors instead.
What is the difference between the break-even point and break-even ROAS?
The break-even point is the number of units that covers all your fixed and variable costs over a period. Break-even ROAS is the return on ad spend at which one ad-driven sale pays for its own ads out of its margin, with no fixed costs in the sum. Use the break-even ROAS calculator to set an ad target.
