Break-Even Point Calculator

The break-even point is the sales volume at which total revenue exactly equals total cost — no profit, no loss. Below it, you lose money on the period; above it, every additional unit contributes its full contribution margin to profit. It's the most common sanity check before launching a product, signing a lease, or hiring.

Break-even is a volume (units or revenue). Profit margin is profit divided by revenue at a given volume. Contribution margin is the per-unit slice of revenue left after variable cost — the portion that "contributes" to covering fixed costs and, beyond break-even, to profit. The first answers "how much do I need to sell?", the second "how profitable was it?", and the third "how much does each sale help?".

Contribution margin is price per unit minus variable cost per unit. If a coffee sells for $4.50 and costs $1.25 in beans, milk, and cup, the contribution margin is $3.25. Each cup contributes $3.25 toward paying off fixed costs; once the rent is covered, those $3.25/cup become profit.

Three levers, with predictable directions: higher fixed costs raise break-even (more to cover); higher price lowers it (each unit covers more); higher variable cost raises it (each unit covers less). Cutting variable cost and raising price work in the same direction — both expand the contribution margin.

Break-even assumes a single product, a constant variable cost, and step-free fixed costs over the period. It can mislead when (1) you sell a mix of products with different margins (a weighted average is needed), (2) fixed costs jump in steps as you scale (a second oven, another full-time hire), or (3) variable cost falls with volume (bulk-discount tiers).