Break Even Units Calculator Formula

Understand the math behind the break even units calculator. Each variable explained with a worked example.

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Formulas Used

Break Even Units

break_even_units = (price - variable_cost_per_unit) > 0 ? ceil(fixed_costs / (price - variable_cost_per_unit)) : 0

Break Even Revenue

break_even_revenue = (price - variable_cost_per_unit) > 0 ? ceil(fixed_costs / (price - variable_cost_per_unit)) * price : 0

Contribution Margin Per Unit

contribution_margin_unit = price - variable_cost_per_unit

Contribution Margin Ratio

contribution_margin_pct = price > 0 ? ((price - variable_cost_per_unit) / price) * 100 : 0

Variables

VariableDescriptionDefault
fixed_costsTotal Fixed Costs(USD)25000
priceSelling Price Per Unit(USD)80
variable_cost_per_unitVariable 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.

fixed_costs = 25000price = 80variable_cost_per_unit = 30
  1. 01Contribution margin per unit = $80 - $30 = $50
  2. 02Break even units = $25,000 / $50 = 500 units
  3. 03Break even revenue = 500 x $80 = $40,000
  4. 04Contribution margin ratio = $50 / $80 x 100 = 62.5%

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