Break-Even Analysis Calculator
Perform complete break-even analysis. Calculate units, revenue, and contribution margin for business viability.
Complete Break-Even Analysis Guide
Break-even analysis answers: How many sales do I need to stop losing money?
Understanding Your Costs
- Fixed Costs: Rent, salaries, insurance, equipment leases - stay same regardless of sales
- Variable Costs: Raw materials, packaging, shipping, sales commissions - rise with each sale
- Contribution Margin: Price - Variable Cost = Amount contributing to fixed costs
Break-Even Formulas
Break-Even Units = Fixed Costs / Contribution Margin
Break-Even Revenue = Break-Even Units × Price
Contribution Margin Ratio = Contribution Margin / Price × 100
How to Lower Break-Even Point
- Reduce fixed costs: Negotiate rent, cut unnecessary subscriptions
- Lower variable costs: Better supplier deals, reduce waste
- Increase prices: If market allows, even small increases help
- Improve efficiency: Produce more with same resources
When to Use Break-Even Analysis
- Starting a new business or product line
- Setting prices for products/services
- Evaluating cost-cutting measures
- Preparing investor presentations
- Making expansion decisions
Frequently Asked Questions
Why is break-even analysis important?
It tells you minimum sales needed to survive. Essential for pricing, budgeting, and investor pitches.
What is contribution margin?
Selling price minus variable cost. The amount each sale contributes to covering fixed costs.
How often should I recalculate?
When costs change, prices change, or launching new products. At least quarterly for most businesses.