Calculate exactly how many units you need to sell to cover your costs.
Rent, salaries, insurance, utilities (costs that don't change).
Materials, labor per item, shipping, commissions.
Please ensure the Selling Price is greater than the Variable Cost.
Break-Even Point (Units): 0
Break-Even Sales Revenue: $0.00
Contribution Margin per Unit: $0.00
What is a Break-Even Point?
The break-even point (BEP) is the stage where your total revenues equal your total expenses. At this point, your business is neither making a profit nor incurring a loss. Every unit sold after reaching the break-even point contributes directly to your net profit.
The Break-Even Formula
To calculate the break-even point in units, we use the following formula:
Fixed Costs: These are expenses that remain constant regardless of how much you sell. Examples include office rent, permanent staff salaries, and software subscriptions.
Variable Costs: Costs that fluctuate based on production volume. This includes raw materials, packaging, and shipping fees.
Contribution Margin: This is the Selling Price minus the Variable Cost. It represents the amount of money from each sale that "contributes" to paying off fixed costs.
Realistic Example
Imagine you are starting a custom coffee mug business:
Fixed Costs: $2,000 (Equipment lease and website hosting).
Your Contribution Margin is $10.00 ($15 – $5). To break even, you divide your $2,000 fixed costs by your $10 margin. You must sell 200 mugs to cover all expenses. The 201st mug represents your first dollar of profit.
Why Understanding Your Break-Even is Critical
Knowing your break-even point allows you to set realistic sales targets, price your products competitively, and determine if a business idea is financially viable before you invest significant capital. It also helps in "what-if" scenarios, such as seeing how a rent increase or a cheaper supplier might impact your bottom line.
function calculateBreakEven() {
var fixedCosts = parseFloat(document.getElementById('fixedCosts').value);
var pricePerUnit = parseFloat(document.getElementById('pricePerUnit').value);
var variableCost = parseFloat(document.getElementById('variableCost').value);
var errorDiv = document.getElementById('errorMessage');
var resultDiv = document.getElementById('beResult');
// Reset display
errorDiv.style.display = 'none';
resultDiv.style.display = 'none';
// Validation
if (isNaN(fixedCosts) || isNaN(pricePerUnit) || isNaN(variableCost)) {
alert('Please enter valid numbers in all fields.');
return;
}
if (pricePerUnit <= variableCost) {
errorDiv.style.display = 'block';
return;
}
// Calculations
var contributionMargin = pricePerUnit – variableCost;
var breakEvenUnits = fixedCosts / contributionMargin;
var breakEvenRevenue = breakEvenUnits * pricePerUnit;
// Display results
document.getElementById('unitsResult').innerText = Math.ceil(breakEvenUnits).toLocaleString() + ' units';
document.getElementById('revenueResult').innerText = '$' + breakEvenRevenue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('marginResult').innerText = '$' + contributionMargin.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
resultDiv.style.display = 'block';
// Smooth scroll to result
resultDiv.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}