Break-Even Units Calculator
Calculate exactly how many units you must sell to break even. Know your minimum sales target.
Complete Break-Even Analysis Guide
Formula: Break-Even Units = Fixed Costs / (Price per Unit - Variable Cost per Unit)
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
How do I calculate break-even units?
Divide fixed costs by contribution margin (price minus variable cost). Thats your break-even quantity.
What if I have multiple products?
Use weighted average contribution margin based on sales mix, or calculate separately per product.
Is lower break-even always better?
Generally yes - means less risk and faster path to profit. But consider growth potential too.