Break-even point calculator
The break-even point (BEP) is the sales volume where revenue equals total costs. Below it you lose money; above it you start generating profit.
With $50,000 fixed, $100 price, $40 variable, and 1,000 current units:
- Contribution margin: $60 per unit (60%)
- Break-even: 834 units
- Revenue at BEP: $83,400
- Margin of safety: 166 units (16.6%)
Formulas
CM = Price − Variable cost per unit
BEP (units) = Fixed costs ÷ CM (rounded up)
BEP (revenue) = BEP (units) × Price
CM ratio (%) = (CM ÷ Price) × 100
Margin of safety % = (Current sales − BEP) ÷ Current sales × 100
The tool uses the same rounding: ceil on units so fixed costs are fully covered.
Step-by-step example (defaults)
- Fixed costs = $50,000
- Price = $100 · Variable = $40
- CM = 100 − 40 = $60
- BEP = 50,000 ÷ 60 = 833.33 → 834 units
- Revenue at BEP = 834 × 100 = $83,400
- At 1,000 sales: safety = 1,000 − 834 = 166 units → 16.6%
Scenario table (same calculator logic)
Rounded like the live tool.
| Fixed | Price | Variable | CM | BEP (u) | Revenue BEP |
|---|---|---|---|---|---|
| $50,000 | $100 | $40 | $60 | 834 | $83,400 |
| $20,000 | $50 | $20 | $30 | 667 | $33,350 |
| $100,000 | $250 | $100 | $150 | 667 | $166,750 |
| $30,000 | $80 | $50 | $30 | 1,000 | $80,000 |
| $12,000 | $25 | $10 | $15 | 800 | $20,000 |
What moves break-even up or down
| Change | BEP effect | Why |
|---|---|---|
| Lower fixed costs | Down | Fewer units needed to cover the fixed base |
| Raise price | Down | Higher contribution per unit |
| Raise variable cost | Up | Lower CM; more units required |
| CM ≤ 0 | Invalid | Every sale loses money; no viable BEP |
Margin of safety bands
| Margin of safety | Practical read |
|---|---|
| < 10% | Fragile: a mild sales dip puts you in the red |
| 10–25% | Operable, but keep a cash buffer |
| > 25% | Healthy cushion for seasonality or discounts |
With defaults (1,000 sales vs 834 BEP) you sit near 16.6%: usable, not loose.
Key concepts
Fixed costs
Rent, fixed salaries, insurance, baseline software, depreciation.
Variable costs
Raw materials, sales commissions, packaging, per-unit shipping.
Contribution margin
What remains from each sale after variable cost to pay fixed costs and profit.
Assumes constant unit price and costs in the analyzed range. Not a cash-flow model and not a tax calculator. Planning estimate only.
FAQ
BEP = 50,000 ÷ 60 ≈ 833.33 → 834 units (rounded up). Minimum revenue ≈ $83,400 at $100/unit.
Divide fixed costs by contribution margin (price − variable per unit). Multiply units by price for revenue at BEP.
Selling price minus variable cost per unit. Default example: $100 − $40 = $60 (60% ratio).
How far current sales can fall before BEP. At 1,000 sales and BEP 834: 166 units ≈ 16.6%.
Each unit loses money or adds nothing. Raise price or cut variable cost before chasing break-even.
No. This tool is unit operating economics. Pair it with margin, sale-price+VAT, ROI, or payback tools for related decisions.