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
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

Break even view

RevenueTotal costsProfit or loss

Compare a few changes

ScenarioUnitsRevenueTotal costsProfit or loss

Break even at different prices

Fixed costs and variable cost stay the same; only the selling price changes.

PriceContribution marginBreak-even unitsBreak-even revenue
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 mode
Break 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

What one sale leaves behind

Illustrative example
Selling price$35.00Amount collected
less
Variable cost$15.00Direct cost of the sale
leaves
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.

01

Choose a normal month

Use an ordinary month rather than a launch spike or unusually quiet period.

02

Separate the costs

Keep monthly overhead apart from costs that rise with each sale.

03

Check the margin

Price minus direct cost shows what each sale can contribute.

04

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.

01
Price

Raise contribution when the offer and customer value support the change.

02
Direct cost

Review materials, fees, delivery, and direct labor before cutting quality.

03
Overhead

Separate optional recurring costs from the base the business needs.

04
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.
5 dollars higher
Base caseA

Your base case

Ready to calculate

Your current result will appear here after you calculate.

Compare
ScenarioB

Your test case

Move after calculating

The 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
01Keep the base case

Save the current inputs as the reference you can return to.

Start
02Test one lever

Change price, direct cost, or revenue and compare the result.

Compare
03Check capacity

Ask whether the target fits the month the business can deliver.

Plan
Avoid these errors

Common Break Even Mistakes

1

Leaving the owner's salary out of fixed costs, which makes the break even point look lower than it really is.

2

Mixing monthly fixed costs with yearly sales, so the time periods do not match.

3

Treating a one-time startup cost as a monthly fixed cost.

4

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

1

It assumes one product, or one average price, and does not split different products.

2

It assumes a constant price and a constant variable cost per unit.

3

It does not include tax.

4

It does not show cash timing, so breaking even on paper is not the same as having cash in the bank.

5

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.

  1. U.S. Small Business Administration: Break-even point - break-even analysis guidance, with the formula Fixed Costs divided by (Price minus Variable Costs).
  2. Break Even Point Formula - our guide to the break-even formula, with worked examples.
  3. Profit Margin After Sales Tax - our guide to profit margin after sales tax, using net sales revenue.
  4. 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 typeGross margin
Business & Consumer Services33.38%
Restaurant/Dining32.24%
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 Calculator
Receipt 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.

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