Cost & Price Parameters
- 1Enter your Total Fixed Costs ($) (such as rent, salaries, and insurance).
- 2Enter the Selling Price per Unit ($).
- 3Enter the Variable Cost per Unit ($) (such as raw materials and packaging).
- 4View your break-even volume in units, break-even sales revenue, unit contribution margin, and margin ratio.
Break-even analysis calculates the minimum sales volume (in units or sales revenue) required for total revenue to equal total costs. Operating above the break-even volume generates net profit, while operating below results in a loss.
Selling price per unit minus variable cost per unit.
Contribution Margin = Selling Price - Variable CostTotal fixed costs divided by unit contribution margin.
Break-Even Units = Fixed Costs / Contribution MarginBreak-even units multiplied by selling price per unit.
Break-Even Revenue = Break-Even Units × Selling PriceContribution = $50 - $30 = $20/unit | Break-Even Units = $10,000 / $20 = 500 unitsContribution margin = 25 − 15 = 10; Break-even units = 10000 / 10 = 1000; Revenue = 1000 × 25Margin = 18; Units = 4500 / 18 = 250; Revenue = 250 × 30- Positive Contribution Margin Requirement: Selling price per unit must exceed variable cost per unit. If variable cost equals or exceeds selling price, contribution margin is zero or negative, making break-even impossible.
- Simplified Model Assumption: This calculator represents a standard break-even model assuming constant selling prices and linear variable costs per unit.
- Fixed costs, selling price, and variable cost must all be zero or positive; negative inputs are rejected.
What is a break-even point?
The break-even point is the exact sales volume (in units or dollars) at which total revenue equals total fixed and variable costs.
What happens if selling price is less than variable cost?
If variable cost exceeds selling price, the unit contribution margin is negative, meaning each sale increases total loss and break-even cannot be reached.
What is the contribution margin?
Selling price per unit minus variable cost per unit — the amount each unit sold contributes towards covering fixed costs. Break-even units = fixed costs ÷ contribution margin.
Why does the calculator reject a price at or below the variable cost?
If the contribution margin is zero or negative, every unit sold loses money and there is no break-even point, so the calculator returns an error instead of a number.