function calculateBreakEven() {
// Retrieve values using var
var fixedCostsInput = document.getElementById("beFixedCosts").value;
var variableCostInput = document.getElementById("beVariableCost").value;
var pricePerUnitInput = document.getElementById("bePricePerUnit").value;
var resultDiv = document.getElementById("be-results");
var errorDiv = document.getElementById("be-error-msg");
// Reset display
resultDiv.style.display = "none";
errorDiv.style.display = "none";
errorDiv.innerText = "";
// Parse floats
var fixedCosts = parseFloat(fixedCostsInput);
var variableCost = parseFloat(variableCostInput);
var pricePerUnit = parseFloat(pricePerUnitInput);
// Validation Logic
if (isNaN(fixedCosts) || isNaN(variableCost) || isNaN(pricePerUnit)) {
errorDiv.innerText = "Please enter valid numbers for all fields.";
errorDiv.style.display = "block";
return;
}
if (fixedCosts < 0 || variableCost < 0 || pricePerUnit < 0) {
errorDiv.innerText = "Values cannot be negative.";
errorDiv.style.display = "block";
return;
}
if (pricePerUnit <= variableCost) {
errorDiv.innerText = "Selling price must be higher than variable cost per unit to break even.";
errorDiv.style.display = "block";
return;
}
// Calculation Logic
// Contribution Margin = Price – Variable Cost
var contributionMargin = pricePerUnit – variableCost;
// Break Even Units = Fixed Costs / Contribution Margin
var breakEvenUnits = fixedCosts / contributionMargin;
// Break Even Revenue = Break Even Units * Price
var breakEvenRevenue = breakEvenUnits * pricePerUnit;
// Margin Ratio
var marginRatio = (contributionMargin / pricePerUnit) * 100;
// Display Results
document.getElementById("resUnits").innerText = Math.ceil(breakEvenUnits).toLocaleString() + " Units";
document.getElementById("resRevenue").innerText = "$" + breakEvenRevenue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resMargin").innerText = "$" + contributionMargin.toFixed(2);
document.getElementById("resMarginRatio").innerText = marginRatio.toFixed(2) + "%";
resultDiv.style.display = "block";
}
Understanding Break-Even Analysis
For any business, knowing the point at which total cost and total revenue are equal is crucial. This is known as the Break-Even Point (BEP). At this point, your business has paid all its expenses but has not yet made a profit. Every unit sold beyond this point generates pure profit.
How to Use This Calculator
To get an accurate analysis, you will need to input three key financial metrics:
Fixed Costs: These are expenses that remain constant regardless of how much you sell. Examples include rent, insurance, administrative salaries, and software subscriptions.
Variable Cost per Unit: These costs fluctuate directly with production volume. This includes raw materials, packaging, labor specifically for production, and shipping costs.
Selling Price per Unit: This is simply the amount you charge the customer for one unit of your product or service.
Why is the Contribution Margin Important?
The calculator also outputs your Contribution Margin. This figure represents the portion of sales revenue that is not consumed by variable costs and so contributes to the coverage of fixed costs.
If your selling price is $50 and your variable costs are $15, your contribution margin is $35. This means for every unit you sell, you have $35 available to pay off your rent and other fixed overheads. Once those are paid, that $35 becomes profit.
Strategies to Lower Your Break-Even Point
If the number of units required to break even seems too high for your current market, consider these strategies:
Reduce Fixed Costs: Negotiate rent, switch to cheaper software, or audit administrative expenses.
Lower Variable Costs: Find cheaper material suppliers or improve production efficiency to reduce waste.
Increase Prices: Raising your prices increases the contribution margin per unit, meaning you need to sell fewer units to cover your fixed costs.