Choose a normal month
Use an ordinary month rather than a launch spike or unusually quiet period.
A practical way to plan next month
Break Even Calculator
See the sales level that covers your costs, understand the result, and test what changes next.
Units and revenue viewsClear planning inputs
Enter your costs and selling price to see the sales level that covers the monthly costs entered below.
Try an example
Fills the fixed costs, variable cost and selling price below, then recalculates.
I sell by
Changes the unit labels only. The calculation stays the same.
Rent, salaries, software, insurance, and similar costs.
The cost of producing or delivering one sale.
The amount charged for one sale.
Optional planning inputs
Selling price must be greater than variable cost per unit.
Break even point0 units
At the inputs above, the sales target will appear here.
Break even revenue$0.00
Revenue required to cover the current costs.
Contribution margin$0.00
Amount from each sale after variable cost.
Units for target profit0 units
Revenue for target profit$0.00
Extra units needed for the target0 units
Time to break evenNot entered
Monthly profit at target$0.00
Annual profit at target$0.00
Margin of safetyNot enteredNot enteredNot entered
Margin of safety
| Measure | Units | Dollars | % of expected sales |
|---|
Break even view
RevenueTotal costsProfit or loss
Compare a few changes
| Scenario | Units | Revenue | Total costs | Profit or loss |
|---|
Break even at different prices
Fixed costs and variable cost stay the same; only the selling price changes.
| Price | Contribution margin | Break-even units | Break-even revenue |
|---|
Use revenue mode for service businesses, SaaS, and consulting where tracking units is less useful.
Optional planning input
Variable cost ratio is the percentage of revenue spent on materials, labor, commissions, or other variable costs.
Variable cost ratio must be between 0 and 99 percent.
Break even revenue$0.00
The revenue target will appear here.
Contribution margin0%
Revenue left after variable costs.
Operating profitNot entered
Based on current monthly revenue.
Revenue for target profit$0.00
Extra revenue needed for the target$0.00
Target profit$0.00
Margin of safetyNot entered
Revenue view
RevenueTotal costsProfit or loss
Compare a few revenue levels
| Scenario | Revenue | Variable costs | Total costs | Profit or loss |
|---|
How the maths works
Break Even Formula: Units and Revenue
A plain-language breakdown of both calculator modes, so the result can also be checked by hand.
Units mode
Break even units = Fixed costs / ( Price per unit − Variable cost per unit )
Revenue modeBreak even revenue = Fixed costs / Contribution margin ratio
Contribution margin is what one sale leaves behind after its own direct cost. The ratio is that margin divided by the selling price.
Worked example
- Fixed costs per month$5,000
- Selling price per unit$35.00
- Variable cost per unit$15.00
- Contribution margin per sale$20.00
- Break even point250 units
- Break even revenue$8,750.00
5,000 ÷ (35 − 15) = 250 units. 250 × $35 = $8,750 of revenue needed to cover the month.
What the result means
How to Read Your Break Even Point
Break even is the point where the costs entered are covered. The useful part is seeing what each sale contributes before you decide what to change.
Read the result in three steps
One sale explains the larger target.
The calculator connects the price of one sale to the monthly costs of the business. Follow the contribution margin first, then compare the target with the month you can realistically deliver.
01
Find what remains
Price minus direct sale cost is the contribution margin.
02
Cover the base
The margin is applied against the fixed costs entered above.
03
Check the month
Expected volume tells you whether the target fits the plan.
Contribution path
Illustrative exampleWhat one sale leaves behind
Selling price$35.00Amount collected
less
Variable cost$15.00Direct cost of the sale
leaves
Contribution margin$20.00Available for fixed costs
57% contributes to the monthly baseExample values
The larger target250 units cover fixed costs
Illustrative values show the relationship. Your calculated inputs update this panel.
Fixed costs divided by contribution margin
That relationship gives the sales level where the entered costs are covered.
Change one assumption at a time
Test price, direct cost, overhead, and expected volume separately so the result stays easy to explain.
A better starting point
Use the calculator with a month in mind.
These four checks turn a clean calculation into a more useful planning reference.
Separate the costs
Keep monthly overhead apart from costs that rise with each sale.
Check the margin
Price minus direct cost shows what each sale can contribute.
Compare capacity
Ask whether the target fits expected sales, time, and demand.
Input guide
Put each cost where it belongs.
The calculator uses fixed and variable costs differently. A clean split makes the result easier to trust and easier to improve.
FStays steady
Fixed costs
Monthly overhead that usually remains in place even when the sales count changes.
RentSoftwareInsuranceRegular salaries
Enter your monthly fixed cost above.
different job
VMoves with sales
Variable costs
Direct cost that rises when another unit or service is delivered.
MaterialsFeesDeliveryDirect labor
Enter the direct cost per sale above.
Three ways to use the result
The same number answers a different question for each business.
Start with the question that matches the way the business earns revenue.
Retail
Can the shop sell enough?
Compare break even units with normal orders, stock, and seasonal demand.
Read the target as volume
Service
What revenue must arrive?
Use Revenue Based mode when labor or delivery costs are easier to express as a ratio.
Read the target as revenue
Product
Which input should move?
Test price, unit cost, and expected volume separately before changing the plan.
Read the target as margin
When the target feels high
How to Lower Your Break Even Point
Review the lever that has the clearest connection to the business before chasing a larger sales number.
Price
Raise contribution when the offer and customer value support the change.
Direct cost
Review materials, fees, delivery, and direct labor before cutting quality.
Overhead
Separate optional recurring costs from the base the business needs.
Capacity
Check that expected sales and available time can support the target.
A clearer comparison
Break Even Calculator: Price Change Comparison
Keep your calculated base case visible while testing one practical change.
01
Calculate a base case, then use the slider to compare one change.
Base caseA
Your base case
Ready to calculateYour current result will appear here after you calculate.
Compare
ScenarioB
Your test case
Move after calculatingThe comparison becomes live after a base result is available.
One assumption at a timeBase case stays visible while the target changes.
After the calculation
Make the next decision visible.
A break even result is a reference point. These three checks help you decide what deserves attention next.
Planning view
Save the current inputs as the reference you can return to.
StartChange price, direct cost, or revenue and compare the result.
CompareAsk whether the target fits the month the business can deliver.
Plan
Avoid these errors
Common Break Even Mistakes
Leaving the owner's salary out of fixed costs, which makes the break even point look lower than it really is.
Mixing monthly fixed costs with yearly sales, so the time periods do not match.
Treating a one-time startup cost as a monthly fixed cost.
Assuming price and costs stay the same at every sales volume, when discounts, bulk buying or overtime can change them.
Know the limits
What This Break Even Calculator Leaves Out
It assumes one product, or one average price, and does not split different products.
It assumes a constant price and a constant variable cost per unit.
It does not include tax.
It does not show cash timing, so breaking even on paper is not the same as having cash in the bank.
It does not guarantee that buyers will buy the break even number of units.
More examples
More Break Even Examples and Formulas
Coffee shop
Coffee Shop Example
Fixed costs of $8,000 per month, a variable cost of $3 per cup, and a selling price of $5 per cup leave a contribution of $2 per cup. Break even is $8,000 / $2 = 4,000 cups per month, about 133 cups per day over 30 days. Break even revenue is 4,000 x $5 = $20,000. Selling 5,000 cups adds 1,000 x $2 = $2,000 of contribution above break even.
Break even 4,000 cups / $20,000
Service business
Service Business Example
Fixed costs of $3,000 per month, a variable cost of $10 per hour, and a price of $60 per hour give a contribution of $50 per hour. Break even is $3,000 / $50 = 60 hours per month. Break even revenue is 60 x $60 = $3,600.
Break even 60 hours / $3,600
Price change
How a Price Change Moves Break Even
With fixed costs of $6,000 and a variable cost of $20 per unit: At a $30 price, the contribution is $10. Break even is 600 units, and break even revenue is $18,000. At a $40 price, the contribution is $20. Break even is 300 units, and break even revenue is $12,000. At a $50 price, the contribution is $30. Break even is 200 units, and break even revenue is $10,000. A higher price lowers the number of units needed, but it does not guarantee that buyers will pay it.
Break even 600 / 300 / 200 units
Two More Useful Formulas
(Expected sales − Break even sales) / Expected sales
It shows how far sales can fall before the business makes a loss.
(Fixed costs + Target profit) / (Price − Variable cost per unit)
It shows how many units to sell for a specific profit goal.
Reading Your Result
If expected sales are above break even, the gap is your margin of safety. If expected sales are below break even, the gap times the contribution per unit is the expected loss. Check that the target fits your capacity, and recalculate when rent, wages, supplier prices, or your selling price change.
Sources
Sources and Further Reading
Written by ReverseSalesTax.com Editorial.
- U.S. Small Business Administration: Break-even point - break-even analysis guidance, with the formula Fixed Costs divided by (Price minus Variable Costs).
- Break Even Point Formula - our guide to the break-even formula, with worked examples.
- Profit Margin After Sales Tax - our guide to profit margin after sales tax, using net sales revenue.
- NYU Stern School of Business, Aswath Damodaran: Margins by Sector (US) - gross margins by sector, data as of January 2026.
Typical gross margins by sector
The figures below are gross margins, not contribution margin ratios. Gross margin is sales minus the direct cost of goods sold, divided by sales. A contribution margin ratio is price minus variable cost per unit, divided by price. The two measures are different, so do not swap them. These figures are averages for US listed companies in each sector, from the NYU Stern margins data as of January 2026, and they are a reference point, not a target for a small business.
| Business type | Gross margin |
|---|---|
| Business & Consumer Services | 33.38% |
| Restaurant/Dining | 32.24% |
| Retail (General) | 33.18% |
| Retail (Grocery and Food) | 26.31% |
| Software (System & Application) | 71.72% |
Sources checked November 7, 2026.
Common questions
Use the number with more confidence.
Short answers for the questions that usually come after a break even calculation.
Clear inputs lead to a clearer reference.
It is the sales level where the revenue generated covers the fixed and variable costs entered into the calculator.
Use regular costs that do not change directly with each sale, such as rent, software, insurance, or monthly salaries.
A higher price can increase the contribution margin. Run the calculation again to see the new sales target.
Yes. Revenue mode uses fixed costs and a variable cost ratio instead of a unit price and unit count.
Contribution margin is what one sale leaves behind after its own direct cost. Profit is what remains once the fixed costs of the month are also covered, so the two only match after the break even point is passed.
No. Enter the amount the business keeps, before sales tax. Tax collected from a customer is passed on to the state, so including it would overstate the contribution margin and lower the break even target.
Margin of safety is the gap between expected sales and break even sales, shown as a percentage of expected sales. A larger gap means the business can lose more sales before it starts making a loss.
Add the target profit to fixed costs, then divide by price minus variable cost per unit. That gives the units needed to reach that profit, not just to break even.
There is no break even point. Each sale loses money instead of covering fixed costs, so the price must rise or the variable cost must fall before the calculation can work.
Use a weighted average contribution margin based on the sales mix of your products. If the mix changes, the break even point changes too, so the calculation must be redone.
Recalculate whenever rent, wages, supplier prices or your selling price change, and review it at least once a month so an old break even point does not mislead you.
Run the calculator first. The chart in your results shows revenue against total cost. Where the lines cross is the break even point. Below that point is the loss zone, and above it is the profit zone.
Another useful check
Need to separate a final receipt total?
Use the Reverse Sales Tax Calculator when you need to separate the original price and tax from one final amount.
Open Reverse Sales Tax CalculatorReceipt totalPrice before tax
$107.25$100.00
Estimated tax included$7.25
Use the related tool to separate the base price from the final amount.Important note
This calculator provides general educational information based on the values entered. Pricing, costs, seasonality, taxes, and business conditions can change the result. Confirm important decisions with a qualified professional.