Break-Even Point Calculator
Determine exactly when your business starts making a profit.
Rent, salaries, insurance, etc.
Selling price to customer.
Materials, labor, shipping per item.
Calculation Results:
Break-Even Units
0
Break-Even Revenue
$0.00
Understanding Your Break-Even Point (BEP)
The break-even point is the critical junction where your business total revenue exactly equals its total expenses. At this point, you have made zero profit, but you have also incurred zero losses. Every unit sold after the break-even point contributes directly to your net profit.
Why Calculate Your Break-Even Point?
- Pricing Strategy: It helps you determine if your current pricing is sustainable against your cost structure.
- Risk Mitigation: Identifies the minimum level of sales needed to survive during slow periods.
- Goal Setting: Provides clear sales targets for your marketing and sales teams.
- Cost Control: Highlights how changes in fixed or variable costs impact your bottom line.
The Formula We Use
Break-Even Units = Total Fixed Costs / (Selling Price per Unit – Variable Cost per Unit)
Realistic Example
Imagine you run a specialty coffee roastery:
- Fixed Costs: $3,000 (Rent + Equipment Leases)
- Sales Price: $20 per bag
- Variable Cost: $8 per bag (Green beans + Packaging + Shipping)
Your Contribution Margin is $12 ($20 – $8). To break even, you would need to sell 250 bags per month ($3,000 / $12). Any bag sold after the 250th bag nets you $12 in pure profit before taxes.