How to find your break-even point
Quick answer: To find your break-even point, enter fixed costs, enter price and variable cost per unit and read the result.
- Enter fixed costs. Costs that don't change with sales: rent, salaries, software, for one month or one year.
- Enter price and variable cost per unit. Variable costs grow with each sale: materials, shipping, payment fees.
- Read the result. Add a profit target to see the sales you need for it.
The formula
Break-even units = fixed costs ÷ (price − variable cost per unit). The part in brackets is the contribution margin: what each sale adds toward your fixed costs.
Frequently asked questions
What if price is lower than variable cost?
Then every sale loses money and there's no break-even point. Raise the price or cut the cost per unit.
Does it work for services?
Yes. Use one hour or one project as the unit.