What is the break even point formula?

The break even point formula is: Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit). This tells you how many units you need to sell to cover all costs. For example, if your fixed costs are $10,000/month, you sell at $50/unit, and each unit costs $30 to produce, your break even is 10,000 ÷ (50-30) = 500 units.

How do I calculate break even in dollars instead of units?

To calculate break even in revenue dollars, multiply your break even units by your selling price. Or use the formula: Fixed Costs ÷ Contribution Margin Ratio, where Contribution Margin Ratio = (Price - Variable Cost) ÷ Price. Our calculator shows both automatically.

What's a good break even point for a new business?

A 'good' break even point depends on your industry and business model. Generally, reaching break even within 12-18 months is healthy for startups. Restaurants typically break even at 60-70% capacity, while SaaS companies often target 40-50% gross margin.

How can I lower my break even point?

You can lower your break even point by: (1) Reducing fixed costs (negotiate rent, cut subscriptions), (2) Increasing prices if the market allows, (3) Reducing variable costs per unit (better supplier deals, efficiency), or (4) Changing your product mix toward higher-margin items.

What's the difference between break even analysis and profit margin?

Break even analysis tells you when you'll stop losing money (revenue = costs). Profit margin tells you how much profit you make per dollar of revenue after break even. Both are essential: break even shows survival, margin shows scalability.

Should I include owner salary in fixed costs for break even?

Yes, include a reasonable owner salary in fixed costs for accurate break even analysis. Many entrepreneurs skip this and think they're profitable when they're actually working for free. Include what you'd pay someone else to do your job.

Break Even Calculator

Calculate your break even point in units and revenue instantly. Free calculator with scenario modeling, contribution margin analysis, and AI-powered optimization tips.

Enter Your Values

Monthly Fixed Costs*

Rent, salaries, insurance, subscriptions—costs that don't change with sales volume

Selling Price per Unit*

The price you charge customers for one unit of your product or service

Variable Cost per Unit*

Cost to produce/deliver one unit: materials, shipping, commissions, payment processing

Current Monthly Sales (Units)

units

Optional: Enter current sales to see how close you are to break even

Target Monthly Profit

Optional: Enter desired profit to see units needed beyond break even

Formula

Break Even Units = Fixed Costs / (Selling Price - Variable Cost)

This calculates how many units you must sell for total revenue to equal total costs. Each unit sold contributes (Price - Variable Cost) toward covering fixed costs. Once fixed costs are covered, every additional unit sold becomes profit.

Units to Break Even500

At 500 units to break even, focus on reducing fixed costs or improving margins.

Break Even Revenue$25,000

Contribution Margin per Unit$20

Contribution Margin Ratio40.0%

Daily Sales to Break Even16.7 units/day

Weekly Sales to Break Even117 units/week

If Price +10%400 units (20% fewer)

Break Even Benchmarks by Industry

Quick PaybackUnder 3 months to break even — excellent

0 – 3

Healthy3-12 months — typical for new businesses

3 – 12

Extended12-18 months — requires patient capital

12 – 18

Long Runway18+ months — high risk, needs funding

> 18

Source: SBA & Startup Genome Research 2024

How to Calculate Break Even Point

Enter your monthly fixed costs (rent, salaries, insurance)
Enter your selling price per unit
Enter your variable cost per unit
View your break even point in units and revenue
Optionally add current sales to see your position
Add target profit to see units needed
Explore scenarios with different pricing

Break Even Industry Benchmarks

12-18 months

Average time to break even (startups)

60-70%

Restaurant break even capacity

25-35%

E-commerce break even margin

12-18 months

SaaS break even (CAC payback)

50-60% utilization

Service business break even

40-50% gross

Retail break even margin