What is the break-even point?

The point at which total revenue equals total costs. Below it you lose money; above it you make profit.

How is the break-even point calculated?

Break-even units = Fixed costs / (Price per unit − Variable cost per unit). The denominator is the contribution margin per unit.

What is the contribution margin?

Contribution margin is the difference between price and variable cost. It is the amount each sale contributes toward covering fixed costs and generating profit.

What is margin of safety?

Margin of safety is how far above the break-even point your actual sales are. A 20% margin of safety means sales can drop 20% before you start losing money.

How do I lower my break-even point?

Three levers: reduce fixed costs (cheaper office, renegotiate contracts), increase price (if the market allows), or reduce variable costs (better supplier terms, less packaging). Each acts independently — combining all three has a multiplicative effect.

Does break-even analysis work for services?

Yes. For service businesses, the unit is often an hour or a project. Fixed costs are salaries, rent and software. Variable costs are contractor time, transaction fees and any per-project expenses. The formula is identical.

Break-Even Analysis Calculator

Find the point where revenue equals costs. Enter fixed costs, price per unit and variable cost per unit to see break-even volume, break-even revenue and contribution margin. Add expected sales to get your margin of safety.

How to use

Enter fixed costs

Add up rent, salaries, software and other costs that don't change with sales.

Enter price per unit

Type the selling price of one unit.

Enter variable cost per unit

Type the per-unit costs like materials, packaging and transaction fees.

Read the result

See the break-even point in units and revenue, plus contribution margin.

Add expected sales (optional)

Enter expected sales to see margin of safety.

Fixed costs

Rent, salaries, software — costs that don't change with sales.

Price per unit

Selling price of one unit.

Variable cost per unit

Materials, packaging, transaction fees — costs per unit sold.

Expected sales (optional)

Used to calculate margin of safety. Leave empty to skip.

Break-even point

500

units

Break-even revenue

25,000.00

total sales

Contribution margin

20.00

40.00% ratio

Margin of safety

—

enter expected sales

Remember: Contribution margin per unit is the money each sale adds to cover fixed costs. Once fixed costs are covered, every additional sale becomes profit.