Break-Even Calculator

Find how many units you need to sell to cover your costs, the sales revenue that takes, and how many more sales reach the profit you want.

Reviewed by Dany, RightSums team · Updated

Runs in your browser. Free, no sign-up.

finance · Business · UK & US

Enter your fixed costs for a period, your selling price and the variable cost of each unit. The calculator works out the contribution each sale makes, your break-even point in units and in sales, the units needed for a target profit, and your margin of safety against expected sales. A profit table shows what happens either side of break-even.

Accepted inputs

  • Fixed costs
  • Selling price per unit
  • Variable cost per unit
  • Target profit
  • Expected units

Outputs

  • Break-even units
  • Break-even sales
  • Contribution margin
  • Units for target profit
  • Margin of safety
  • Profit table

How to use the Break-Even Calculator

  1. Enter your fixed costs for the period you are looking at, such as a month: rent, salaries, insurance and software.
  2. Enter the selling price of one unit before VAT, and the variable cost of making or buying it, including packaging and card fees.
  3. Add a target profit and the number of units you expect to sell if you want those figures too.
  4. Read off the break-even point and check the profit table to see how quickly profit builds above it.

Frequently asked questions

How do you calculate a break-even point?

Take the variable cost of one unit away from its selling price to get the contribution per unit, then divide your fixed costs by it. With fixed costs of £5,000, a £25 price and a £10 variable cost, each sale contributes £15, so you need 334 units (5,000 ÷ 15 = 333.3, rounded up).

What is contribution margin?

It is what each sale leaves over after its own variable costs, which goes towards fixed costs and then profit. A £25 item that costs £10 to make has a £15 contribution, which is 60% of the price.

How do I work out break-even sales in pounds?

Divide fixed costs by the contribution margin ratio. £5,000 ÷ 0.6 = £8,333.33. The calculator also shows the sales value of the whole number of units you need to sell.

What is the margin of safety?

How far sales can fall before you make a loss. If you expect to sell 450 units and break even at 334, your margin of safety is 116 units, or 25.8% of expected sales.

Should prices include VAT?

No. Use prices and costs before VAT if you are VAT registered, because the VAT you charge is paid to HMRC and is not income for the business.

What if my business sells lots of different products?

Use your average selling price and average variable cost per sale, or work in sales value: enter 1 as the price and your average variable cost as a share of sales, such as 0.4 for 40%, and the break-even units become break-even sales in pounds.

Related tools

  • Markup Calculator

    Work out a selling price from your cost and markup, find the markup you need for a target margin, and see prices with and without 20% VAT.