Rent, salaries, insurance, etc. (monthly or annually)
Materials, labor, shipping per single item
How much you charge customers for one item
Contribution Margin:$0.00
Break-Even Units:0
Break-Even Revenue:$0.00
Understanding Break-Even Analysis
Whether you are launching a startup, pricing a new product, or analyzing your current business model, knowing your Break-Even Point (BEP) is fundamental to financial planning. The break-even point is the precise moment where your total revenue equals your total costs. At this point, you are not making a profit, but you are not losing money either.
This calculator helps you determine exactly how many units of a product or service you need to sell to cover all your costs. Any sales volume above this point represents profit, while any volume below it represents a loss.
The Break-Even Formula
To calculate the break-even point in units, we use the following standard formula:
Break-Even Units = Fixed Costs / (Selling Price per Unit – Variable Cost per Unit)
The denominator (Selling Price – Variable Cost) is known as the Contribution Margin. This figure represents the amount of money from each sale that is available to pay down fixed costs. Once fixed costs are fully paid, the contribution margin becomes pure profit.
Key Terms Explained
Fixed Costs: Expenses that remain constant regardless of how much you sell. Examples include rent, administrative salaries, insurance premiums, and software subscriptions.
Variable Costs: Expenses that fluctuate directly with sales volume. Examples include raw materials, packaging, direct labor, and shipping fees.
Selling Price: The final price charged to the customer for one unit of your product or service.
How to Use This Data
Once you have calculated your break-even point using the tool above, you can make informed decisions about your pricing strategy and cost structure. If the number of units required to break even seems unachievable, you have three primary levers to pull:
Raise Prices: Increasing the selling price improves the contribution margin, requiring fewer sales to break even.
Lower Variable Costs: Negotiating better rates for materials or shipping can widen the margin.
Reduce Fixed Costs: Cutting overhead expenses directly lowers the threshold for profitability.
function calculateBreakEven() {
// Get values from inputs using specific IDs
var fixedCostsInput = document.getElementById('fixedCosts');
var variableCostsInput = document.getElementById('variableCosts');
var pricePerUnitInput = document.getElementById('pricePerUnit');
var fixedCosts = parseFloat(fixedCostsInput.value);
var variableCosts = parseFloat(variableCostsInput.value);
var pricePerUnit = parseFloat(pricePerUnitInput.value);
// UI Elements
var errorDiv = document.getElementById('errorMessage');
var resultsDiv = document.getElementById('resultsArea');
var displayMargin = document.getElementById('displayMargin');
var displayUnits = document.getElementById('displayUnits');
var displayRevenue = document.getElementById('displayRevenue');
// Reset UI
errorDiv.style.display = 'none';
resultsDiv.style.display = 'none';
// Validation logic
if (isNaN(fixedCosts) || isNaN(variableCosts) || isNaN(pricePerUnit)) {
errorDiv.innerHTML = "Please enter valid numbers in all fields.";
errorDiv.style.display = 'block';
return;
}
if (fixedCosts < 0 || variableCosts < 0 || pricePerUnit = pricePerUnit) {
errorDiv.innerHTML = "Selling Price must be higher than Variable Cost to generate a contribution margin.";
errorDiv.style.display = 'block';
return;
}
// Calculation Logic
var contributionMargin = pricePerUnit – variableCosts;
var breakEvenUnits = fixedCosts / contributionMargin;
var breakEvenRevenue = breakEvenUnits * pricePerUnit;
// Formatting results
// Round units up to nearest whole number because you usually can't sell partial units
var unitsFormatted = Math.ceil(breakEvenUnits).toLocaleString();
// Format currency
var marginFormatted = contributionMargin.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var revenueFormatted = breakEvenRevenue.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
// Display Results
displayMargin.innerHTML = marginFormatted;
displayUnits.innerHTML = unitsFormatted + " Units";
displayRevenue.innerHTML = revenueFormatted;
resultsDiv.style.display = 'block';
}