Break-Even Point Calculator
Written by Thierno Sadou Diallo, formula verified per our methodology • Last checked on 9/5/2026
The break-even point is calculated with fixed costs ÷ (unit selling price − unit variable cost). With €10,000 in fixed costs, a selling price of €50, and a variable cost of €30 per unit, you need to sell 500 units to break even, for €25,000 in revenue.
Explanation
The break-even point shows the sales volume beyond which a business stops losing money and starts making it: below this point, the margin generated by sales isn't yet enough to cover fixed costs; beyond it, every additional unit sold contributes directly to profit. The calculation relies on the unit contribution margin (selling price minus variable cost per unit): the higher this margin, the faster the break-even point is reached, with fewer units sold. Conversely, a low unit margin requires a very large sales volume before fixed costs are covered, which makes the business more sensitive to swings in demand. This calculation is commonly used when launching a business or a new product, to assess whether a realistic sales target actually reaches financial break-even, or to measure the impact of higher fixed costs or a lower price on this threshold.
Example: €10,000 fixed costs, €50 price, €30 variable cost
Inputs
Fixed costs: €10,000. Unit selling price: €50. Unit variable cost: €30.
Calculation
Unit margin = 50 − 30 = €20. Break-even = 10,000 ÷ 20 = 500 units. Revenue at break-even = 500 × 50 = €25,000.
Result
You need to sell 500 units (i.e. €25,000 in revenue) to exactly cover fixed costs.
Frequently asked questions
What happens if the unit variable cost is higher than the selling price?
In that case, every unit sold deepens the loss instead of reducing it: a break-even point simply doesn't exist, no matter the volume sold. You'd need to either raise the selling price or lower the variable cost per unit, before even considering fixed costs.
What's the difference between fixed and variable costs?
Fixed costs (rent, fixed salaries, insurance) stay the same regardless of the volume sold over the period considered. Variable costs (raw materials, packaging, commissions) move directly with each unit produced or sold. This distinction is central to the break-even calculation: only the margin generated on top of variable costs goes toward covering fixed costs.
Does reaching the break-even point guarantee the business is viable?
No: it only shows the volume beyond which the business stops losing money, not that it's profitable or sustainable long-term. It doesn't account for the cash available to survive until that point, or the market's actual capacity to absorb that sales volume — two separate questions worth examining in a business plan.