Break-Even Analysis

Purpose

The Break-Even Analysis calculator helps you determine how many units you need to sell to cover your fixed and variable costs, how much revenue that requires, and how many units are needed to achieve a target profit.

It also lets you enter a sales volume to see the resulting revenue, costs, and profit.

Inputs

Fixed Costs

Enter costs that do not change with the number of units produced or sold.

Examples include rent, salaries, insurance, depreciation, and administrative expenses.

Variable Cost per Unit

Enter the cost incurred for each unit sold, such as materials, packaging, direct production costs, or per-unit commissions.

Selling Price per Unit

Enter the selling price received for each unit.

The selling price must be greater than the variable cost per unit for a meaningful break-even calculation.

Target Profit

Enter the profit you want to achieve.

For example, entering $5,000 calculates how many units must be sold to cover fixed costs and generate an additional $5,000 profit.

Scenario Units

Enter a number of units you expect to sell.

The calculator uses this quantity to calculate the corresponding revenue, variable costs, and profit.

Results

Break-Even Analysis

The main result table compares three situations:

• Break-Even — the sales volume at which profit is zero.
• Target Profit — the sales volume required to achieve the target profit.
• Scenario — the sales volume entered in Scenario Units.

The table shows:

Metric	Meaning
Units	Number of units sold
Revenue	Total sales revenue
Variable Cost	Total variable cost
Fixed Cost	Total fixed cost
Profit	Profit after variable and fixed costs

Contribution Margin per Unit

The contribution margin per unit is the amount remaining from each sale after paying the variable cost.

Contribution Margin = Selling Price per Unit − Variable Cost per Unit

This amount contributes toward covering fixed costs and then generating profit.

Contribution Margin %

This expresses the contribution margin as a percentage of the selling price.

A higher contribution margin generally means fewer units are required to cover fixed costs.

Break-Even Quantity

The break-even quantity is the number of units that must be sold for total revenue to equal total costs.

At this point, profit is zero.

Break-Even Revenue

This is the sales revenue corresponding to the break-even quantity.

Target Profit Quantity

This is the number of units required to cover fixed costs and achieve the specified target profit.

Target Profit Revenue

This is the revenue corresponding to the target-profit quantity.

Scenario Profit

This is the estimated profit at the number of Scenario Units entered.

A positive value indicates a profit, while a negative value indicates a loss.

How the Calculation Works

Break-Even Quantity

Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit

Break-Even Revenue

Break-Even Revenue = Break-Even Units × Selling Price per Unit

Target-Profit Quantity

Target-Profit Units = (Fixed Costs + Target Profit) ÷ Contribution Margin per Unit

Scenario Profit

Scenario Profit = (Scenario Units × Selling Price per Unit) − (Scenario Units × Variable Cost per Unit) − Fixed Costs

Example

Suppose a business has:

• Fixed Costs: $10,000
• Variable Cost per Unit: $20
• Selling Price per Unit: $50
• Target Profit: $5,000
• Scenario Units: 500

The contribution margin is:

$50 − $20 = $30 per unit

The break-even quantity is approximately:

$10,000 ÷ $30 = 333.33 units

So the business needs to sell approximately 334 units to move beyond break-even when whole units are required.

The target-profit quantity is:

($10,000 + $5,000) ÷ $30 = 500 units

At 500 units, revenue is $25,000, variable cost is $10,000, fixed cost is $10,000, and profit is $5,000.

Interpreting the Results

The calculator can help answer questions such as:

• How many units must we sell before we start making a profit?
• What sales revenue is required to break even?
• How many units are needed to achieve a particular profit target?
• What happens to profit if we sell a specific number of units?
• How does the contribution margin affect the required sales volume?

A lower break-even quantity generally means the business can reach profitability with fewer sales.

A higher contribution margin reduces the number of units required to cover fixed costs.

Important Considerations

This calculator uses a simplified break-even model. It assumes:

• A constant selling price per unit.
• A constant variable cost per unit.
• Fixed costs remain constant over the relevant sales volume.
• All units sold are treated consistently.
• There are no volume discounts, tiered pricing, taxes, financing costs, or changes in cost structure.

If the selling price is equal to or below the variable cost per unit, each additional unit does not contribute enough to cover fixed costs, and a conventional break-even point cannot be achieved.

The results are estimates based on the assumptions and inputs provided.