Business Break-Even Point Calculator
Determine exactly how many units you need to sell to cover all your costs.
Please ensure the Sales Price is higher than the Variable Cost.
Break-Even Units:
0
Break-Even Sales Revenue:
$0.00
Contribution Margin per Unit:
$0.00
Units to Hit Profit Goal:
0
What is a Break-Even Point?
In business and accounting, the Break-Even Point (BEP) is the production level or sales volume at which total revenues exactly equal total expenses. At this point, your business is neither making a profit nor incurring a loss. It is the critical "zero point" that every startup and established business must calculate to ensure financial sustainability.
How to Calculate Your Break-Even Point
The formula for break-even analysis is straightforward but requires accurate data for three specific metrics:
- Fixed Costs: These are expenses that remain constant regardless of how much you sell (e.g., rent, insurance, salaries, and software subscriptions).
- Sales Price Per Unit: The amount of money you charge customers for one single unit of your product or service.
- Variable Cost Per Unit: The costs that change in direct proportion to production volume (e.g., raw materials, packaging, and direct shipping).
The Formula:
Break-Even Units = Total Fixed Costs / (Price per Unit – Variable Cost per Unit)
Example Calculation: The Coffee Shop Scenario
Let's say you run a small coffee shop with the following monthly numbers:
- Fixed Costs: $3,000 (Rent, Utilities, Staff)
- Average Cup Price: $5.00
- Variable Cost: $1.50 (Beans, milk, cup, sleeve)
The Contribution Margin is $5.00 – $1.50 = $3.50. To find the break-even units: $3,000 / $3.50 = 858 cups of coffee. You must sell at least 858 cups every month just to pay the bills.
Why Break-Even Analysis Matters for SEO and Growth
Understanding your BEP allows you to make informed decisions about pricing strategies and cost management. If your break-even number is too high, you have three primary levers to pull:
- Lower Fixed Costs: Negotiate lower rent or reduce overhead.
- Lower Variable Costs: Find cheaper suppliers or improve production efficiency.
- Increase Prices: Raise the unit price (assuming the market will tolerate the increase).