Calculate break-even point for your business
The break-even point is the stage in a business where total revenue equals total expenses. At this point, the business is making neither a profit nor a loss. Any sales made beyond this point represent pure profit.
The break-even point in units is calculated using the formula: Break-even Units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). The difference between the selling price and variable cost is known as the contribution margin.
Fixed costs remain constant regardless of sales volume (like rent, salaries, insurance). Variable costs change in direct proportion to production or sales volume (like raw materials, packaging, shipping, commissions).
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