Break Even Units Calculator Formula
Understand the math behind the break even units calculator. Each variable explained with a worked example.
Formulas Used
Break Even Units
break_even_units = (price - variable_cost_per_unit) > 0 ? ceil(fixed_costs / (price - variable_cost_per_unit)) : 0Break Even Revenue
break_even_revenue = (price - variable_cost_per_unit) > 0 ? ceil(fixed_costs / (price - variable_cost_per_unit)) * price : 0Contribution Margin Per Unit
contribution_margin_unit = price - variable_cost_per_unitContribution Margin Ratio
contribution_margin_pct = price > 0 ? ((price - variable_cost_per_unit) / price) * 100 : 0Variables
| Variable | Description | Default |
|---|---|---|
fixed_costs | Total Fixed Costs(USD) | 25000 |
price | Selling Price Per Unit(USD) | 80 |
variable_cost_per_unit | Variable Cost Per Unit(USD) | 30 |
How It Works
How to Calculate Break Even Units
Formula
Break Even Units = Fixed Costs / (Price - Variable Cost Per Unit)
This tells you the exact number of units you must sell before you start making a profit. The contribution margin per unit is the key driver -- a higher margin means fewer units needed to break even.
Worked Example
A business with $25,000 in fixed costs selling a product for $80 with a $30 variable cost per unit.
- 01Contribution margin per unit = $80 - $30 = $50
- 02Break even units = $25,000 / $50 = 500 units
- 03Break even revenue = 500 x $80 = $40,000
- 04Contribution margin ratio = $50 / $80 x 100 = 62.5%
Frequently Asked Questions
What happens if variable cost exceeds price?
If variable cost per unit is higher than the selling price, you lose money on every unit sold. You will never break even. You need to either raise prices or reduce variable costs.
How do I reduce break even units?
Three strategies: (1) Raise your selling price, (2) Reduce variable costs per unit, (3) Reduce fixed costs. Each of these increases the contribution margin or decreases the amount you need to cover.
Learn More
Guide
Break-Even Analysis Guide
Learn how to perform a break-even analysis for your business. Understand fixed costs, variable costs, contribution margin, and how to find the break-even point.
Ready to run the numbers?
Open Break Even Units Calculator