Break-Even Calculator Formula
Understand the math behind the break-even calculator. Each variable explained with a worked example.
Formulas Used
Break-Even Units
break_even_units = contribution_margin > 0 ? ceil(fixed_costs / contribution_margin) : 0Break-Even Revenue
break_even_revenue = break_even_units * price_per_unitContribution Margin
contribution_margin_out = contribution_marginCM Ratio
cm_ratio = price_per_unit > 0 ? contribution_margin / price_per_unit * 100 : 0Variables
| Variable | Description | Default |
|---|---|---|
fixed_costs | Fixed Costs(USD) | 10000 |
price_per_unit | Price per Unit(USD) | 50 |
variable_cost_per_unit | Variable Cost per Unit(USD) | 20 |
contribution_margin | Derived value= price_per_unit - variable_cost_per_unit | calculated |
How It Works
Break-Even Formula
Break-Even Units = Fixed Costs / (Price - Variable Cost)
Contribution Margin = Price per Unit - Variable Cost per Unit
The break-even point is where total revenue equals total costs (zero profit).
Worked Example
$10,000 fixed costs, $50 price, $20 variable cost.
fixed_costs = 10000price_per_unit = 50variable_cost_per_unit = 20
- 01Contribution margin = $50 - $20 = $30
- 02Break-even = $10,000 / $30 = 334 units
- 03Revenue at break-even = 334 × $50 = $16,700
Frequently Asked Questions
What are fixed vs variable costs?
Fixed costs stay the same regardless of volume (rent, salaries). Variable costs change with each unit produced (materials, shipping).
Ready to run the numbers?
Open Break-Even Calculator