Break-Even Calculator for Small Business

Use this free break-even calculator to find out how many units you need to sell, and how much revenue you need to bring in, before your small business stops losing money and starts making a profit. Enter your numbers below and the results update instantly.

How to Use the Break-Even Calculator

1. Enter your fixed costs for one period, such as a month. These are costs you pay even if you make no sales, like rent, insurance, salaries, and software subscriptions.
2. Enter your selling price per unit. If you sell a service, a “unit” can be one project, one hour, or one appointment.
3. Enter your variable cost per unit. These costs rise with every sale, such as materials, packaging, shipping, and card processing fees.
4. Add a target profit if you want to know how much you need to sell to reach a specific profit goal.

The Break-Even Formulas

The calculator uses the standard break-even formulas:

• Contribution margin per unit = Selling price per unit − Variable cost per unit
• Break-even point in units = Fixed costs ÷ Contribution margin per unit
• Contribution margin ratio = Contribution margin per unit ÷ Selling price per unit
• Break-even point in sales dollars = Fixed costs ÷ Contribution margin ratio
• Units needed for a target profit = (Fixed costs + Target profit) ÷ Contribution margin per unit

Example

Suppose a small business has $6,000 in monthly fixed costs. It sells a product for $50, and each unit costs $30 in materials and shipping.

• Contribution margin per unit: $50 − $30 = $20
• Break-even point in units: $6,000 ÷ $20 = 300 units
• Contribution margin ratio: $20 ÷ $50 = 40%
• Break-even point in sales: $6,000 ÷ 0.40 = $15,000

The business needs to sell 300 units, or $15,000 worth of products, each month to cover its costs. If the owner wants a $2,000 monthly profit, the target becomes ($6,000 + $2,000) ÷ $20 = 400 units, or $20,000 in sales.

How to Lower Your Break-Even Point

• Reduce fixed costs by reviewing subscriptions, rent, and other recurring bills.
• Lower variable costs by negotiating with suppliers or reducing waste and shipping costs.
• Review your pricing. A higher price increases your contribution margin, but make sure customers will still buy at that price.

For a full explanation with more examples, read our guide to break-even analysis for small business. You can also use our guide on small business profit margin to see how much of each sale you keep after the break-even point.

Frequently Asked Questions

What is a break-even point?

The break-even point is the level of sales where total revenue equals total costs. At that point, the business has no profit and no loss. Every sale above it adds to profit.

Can I use this calculator for a service business?

Yes. Treat one service, project, hour, or appointment as one unit, and enter the average price and the variable cost for each one.

Why does the calculator round units up?

You cannot sell part of a unit. If the math shows 299.2 units, you need to sell 300 units to fully cover your costs.

What if my selling price is lower than my variable cost?

Then each sale loses money, and selling more will not help you break even. You would need to raise your price or lower your variable costs first.

This calculator provides estimates for planning purposes only. It is not financial or tax advice.