Break-Even Calculator
Break-even point = Fixed Costs ÷ (Price per Unit − Variable Cost per Unit). This calculator shows exactly how many units you need to sell before your business becomes profitable — plus your contribution margin, break-even revenue, and a visual profit/loss curve across all volume levels.
How Break-Even Analysis Works
Break-even analysis separates your costs into fixed (don't change with volume) and variable (scale with each unit sold). The difference between your selling price and variable cost is your contribution margin — every dollar of contribution margin after break-even is pure profit.
Industry Benchmarks: Typical Contribution Margins
| Industry | Typical CM Ratio | What This Means |
|---|---|---|
| SaaS / Software | 70–85% | Almost all revenue goes toward fixed costs + profit |
| Professional Services | 50–70% | Labor is mostly fixed; high margin per engagement |
| Manufacturing | 35–55% | Materials and direct labor create significant variable costs |
| E-commerce / Retail | 25–45% | COGS, fulfillment, and returns reduce margin |
| Restaurant | 15–35% | Food + labor costs are high; tight margins require high volume |
| Construction / Trades | 20–40% | Materials and subcontractors vary with each project |
💡 The Break-Even Scenario Test
Use the Compare Mode to model pricing decisions: Scenario A = current pricing at $60/unit. Scenario B = raise price to $70/unit (same volume assumption). The comparison shows your break-even point drops from ~1,429 units to ~1,111 units — a 22% reduction in the sales required just to survive. Before launching or changing prices, always test the break-even sensitivity: how does a $5 price increase or a 10% variable cost reduction affect your survival threshold?
Break-Even Calculator
Inputs
Results
Profit/Loss by Volume
Based on your results — what to do next:
Analyze your profit margins
Your contribution margin is 58.3%. Run gross, operating, and net margins to benchmark against your industry.
What's your business worth?
Once you're past break-even and generating EBITDA, your business valuation multiplier kicks in. See what buyers would pay.
Know your true fixed costs
Employee cost is your biggest fixed cost line. The true burdened cost of staff is 1.25–1.4× salary. Calculate it exactly.
Break-Even Analysis FAQ
When should I run a break-even analysis?
Run break-even analysis before launching any product or service, before changing your pricing, before hiring employees (they add fixed costs), before signing a lease, and annually as a business health check. If your break-even point requires selling more units than your realistic market demand, you're either priced too low or your fixed costs are too high — break-even forces that conversation before you lose money.
Can break-even analysis be used for a service business?
Absolutely. For a service business, the "unit" is a client engagement, billable hour, or service delivery. Variable cost per unit is your cost of delivery (direct labor time at your hourly rate, subcontractors, materials). Fixed costs are your overhead (rent, admin salaries, software). Example: A consultant charging $200/hour with $50/hour in direct costs (their own salary allocation) has a $150 contribution margin. With $15,000/month in fixed overhead, break-even = $15,000 ÷ $150 = 100 billable hours/month.
What does it mean if my break-even point is very high?
A high break-even point means your business is capital-intensive relative to your margins. This isn't inherently bad (airlines and manufacturers have high break-evens), but it means higher financial risk if sales volumes fall short. Solutions: reduce fixed costs (especially overhead and non-revenue-generating expenses), increase prices to improve contribution margin, or reduce variable costs through supplier negotiation or process efficiency. Every $1 you cut from fixed costs reduces break-even by 1 ÷ contribution margin units.
How does the break-even calculator handle subscription revenue?
For SaaS or subscription businesses, treat the "unit" as one subscriber per month and "price" as monthly recurring revenue per subscriber. Variable cost per subscriber includes hosting, support, payment processing, and onboarding. This gives you a customer break-even point: how many paying subscribers are needed to cover your monthly fixed costs. This metric is also called "MRR break-even" — the monthly recurring revenue needed to reach profitability.