Break-Even Calculator Formula

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

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Formulas Used

Break-Even Units

break_even_units = contribution_margin > 0 ? ceil(fixed_costs / contribution_margin) : 0

Break-Even Revenue

break_even_revenue = break_even_units * price_per_unit

Contribution Margin

contribution_margin_out = contribution_margin

CM Ratio

cm_ratio = price_per_unit > 0 ? contribution_margin / price_per_unit * 100 : 0

Variables

VariableDescriptionDefault
fixed_costsFixed Costs(USD)10000
price_per_unitPrice per Unit(USD)50
variable_cost_per_unitVariable Cost per Unit(USD)20
contribution_marginDerived value= price_per_unit - variable_cost_per_unitcalculated

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
  1. 01Contribution margin = $50 - $20 = $30
  2. 02Break-even = $10,000 / $30 = 334 units
  3. 03Revenue at break-even = 334 × $50 = $16,700

Ready to run the numbers?

Open Break-Even Calculator