How much you need to sell before you cover your costs
This break even calculator works out how many units and how much revenue you need before your income matches your costs. Enter your fixed costs, selling price and variable cost, and you get the answer in units and in money, along with contribution margin, margin of safety, a chart and two scenario tables. It picks your currency automatically and you can change it. It doubles as a break-even point calculator: the same inputs give you the point in units and in money.
Costs and selling data
Pick how you want to enter the data first: per-unit figures, or total revenue and total variable cost.
This is the level where revenue equals total costs. Below it you lose money, above it profit starts. The fraction is rounded up because you cannot sell part of a unit.
Break-even equals fixed costs divided by the contribution margin. It is a managerial accounting formula and does not change from one country to another. The calculator assumes your selling price and unit variable cost hold within the range you operate in, and splits costs into fixed and variable only. Currency is a display unit: no conversion is performed. Enter amounts before tax, and recalculate whenever your costs change.
Break-even chart
Break-even sits where the revenue line crosses the total cost line. The blue area past it is profit; before it is loss.
What happens at each sales level
Levels are set as multiples of your own break-even, so you can see what each step does to profit.
| Level | Units | Revenue | Total costs | Profit or loss |
|---|---|---|---|---|
| Stop selling | 0.00 | 0.00 | 20,000.00 | -20,000.00 |
| Half of break-even | 166.67 | 25,000.00 | 35,000.00 | -10,000.00 |
| 80% of break-even | 266.67 | 40,000.00 | 44,000.00 | -4,000.00 |
| Break-even | 333.33 | 50,000.00 | 50,000.00 | 0.00 |
| 120% of break-even | 400.00 | 60,000.00 | 56,000.00 | 4,000.00 |
| 1.5x break-even | 500.00 | 75,000.00 | 65,000.00 | 10,000.00 |
| 2x break-even | 666.67 | 100,000.00 | 80,000.00 | 20,000.00 |
Effect of a 10% change in each driver
The same 10% move does not have the same effect everywhere. This table ranks them on your numbers.
| Scenario | New break-even (units) | Change |
|---|---|---|
| Raise selling price 10% | 266.67 | -20.00% |
| Cut variable cost 10% | 289.86 | -13.04% |
| Cut fixed costs 10% | 300.00 | -10.00% |
| Fixed costs rise 10% | 366.67 | +10.00% |
Most small businesses cannot name the number that makes them safe. They know their sales, and they know they pay rent and salaries, but not how many units they have to sell this month before they start making money. That number is the break-even point, and it is the first one to know before you set a price, open a branch or hire someone.
This break even calculator works it out in units and in money at once, and shows the contribution margin and margin of safety alongside it, a chart of where the revenue line crosses the cost line, and two tables: what happens at each sales level, and which change moves the break-even most.
What this tool calculates
It returns the sales volume at which revenue equals total costs. For the full definition, the types and worked examples, read the break-even point guide; this page is for doing the calculation.
Three numbers are required, and two optional fields add the margin of safety and a target profit. The required three:
| Input | What it means | Examples |
|---|---|---|
| Fixed costs | Do not move with sales volume | Rent, fixed salaries, subscriptions, insurance, depreciation |
| Variable cost per unit | Spent on every unit sold | Purchase cost, materials, packaging, shipping, sales commission |
| Selling price per unit | Revenue from one unit, before tax | The price of the product or service on the invoice |
The formulas this calculator uses
- Contribution margin per unit is the selling price minus the variable cost per unit. It is what each unit contributes towards covering the fixed costs.
- Break-even units are the fixed costs divided by the contribution margin per unit.
- Break-even sales are the fixed costs divided by the contribution margin ratio, where the ratio is the margin divided by the selling price.
- For a target profit, add the profit you want to the fixed costs before dividing, and you get the volume needed to reach it rather than just to break even.
The values the calculator opens with: fixed costs 20,000, selling price 150, variable cost 90. Contribution margin 60, ratio 40%. Break-even units are 20,000 divided by 60, or 333.33, rounded up to 334 because you cannot sell part of a unit. Break-even sales are 20,000 divided by 40%, or 50,000.
How to read the margin of safety
The margin of safety is the gap between your current sales and your break-even sales, as a share of current sales. At 33% your sales could drop by a third before you start losing money. The smaller it gets, the more fragile the business is to a weak season or a large customer who delays an order. Compare it to your own previous months before you compare it to anyone else's.
Where each number goes
What spoils the result is rarely the formula. It is a number in the wrong field. Four cases come up again and again:
- Two different periods mixed. Annual fixed costs with sales measured by the month puts the answer on the wrong period: the units come out annual, and the margin of safety compares a year's break-even against a month's sales. Use one period: if the fixed costs are for a month, the current sales are for a month.
- Sales commission in the fixed field. Put the commission on a sold unit in the variable-cost-per-unit field, not in fixed costs. To work out which of your own items are fixed and which are variable, see the break-even guide.
- A mixed salary counted wholly as fixed. Someone on a base salary plus commission goes in two fields: the base in fixed costs, the commission in the variable cost per unit. Putting the whole of it in fixed overstates the fixed costs and the contribution margin at the same time, so the break-even comes out wrong in either direction depending on your volume.
- Amounts that still include tax. Enter every figure before tax: tax you collect from a customer is not your revenue, you hold it on the authority's behalf, and leaving it in inflates the price and the cost at once.
- The list price rather than the paid price. If you sell at a standing discount, enter what the customer actually pays. Otherwise the break-even comes out lower than it is.
Which fields to use for your kind of business
The middle column picks the method for you. If you sell many items at different prices and margins, a single unit price means nothing, so you enter total revenue and total variable costs for the same period and the calculator derives the blended contribution margin ratio and computes break-even sales from it.
| Business | Better method | What belongs in variable cost |
|---|---|---|
| Retail shop | Total revenue | Cost of goods sold and payment fees |
| Restaurant or cafe | Total revenue | Food cost, packaging, delivery-app commission |
| Fixed-price service | Per-unit figures | What each job consumes: materials, travel, commission |
| Manufacturing or workshop | Per-unit figures | Raw materials, production-linked wages, packaging |
| Monthly subscriptions | Per-unit figures | Cost to serve one subscriber and payment gateway |
Currencies, and why there is no conversion
The calculator picks your currency automatically from your device and country, covering the Saudi riyal, Jordanian dinar, UAE dirham, Egyptian pound, Kuwaiti dinar and Bahraini dinar, and you can change it at any time and it remembers your choice. What it does not do is convert between currencies, and that is deliberate: a break-even is computed inside one currency, so your fixed costs, your selling price and your variable cost are all in the same one. An exchange rate adds nothing to the formula, and any rate we showed would be stale by the time you read it.
Which change moves the result most
- Raising the price is usually the fastest lever, because it widens the contribution margin and shrinks the variable-cost share at the same time. It is also the riskiest, because it can cut the quantity you sell.
- Cutting the variable cost, by negotiating with suppliers or reducing waste, widens the same margin without touching the price. Because the price is always larger than the variable cost, the same percentage move adds less to the margin, so it always moves the break-even in units less than an equal price rise does. The sensitivity table above ranks them in units on your own numbers.
- Cutting fixed costs lowers the break-even by exactly the same percentage: take 10% off the fixed costs and the break-even falls 10%.
The sensitivity table ranks these levers on your numbers rather than on general ones, so you can see which is worth the effort first. If you are building next year's plan, start from the budget and check the break-even at each scenario in it.
What this calculator does not do
- It works inside one operating range. Outside it, volume discounts move the price and fixed costs jump a step when you open a branch; inside it, every cost counts as fixed or variable, so splitting a semi-variable one like electricity is your judgement.
- The second method assumes a constant sales mix: change the mix and the blended ratio changes, and the break-even with it.
- This break-even is an accounting one, not a cash one. Fixed costs include non-cash items such as depreciation, so reaching it covers costs on paper, not necessarily in cash that month.
Once your numbers sit in one accounting system that organises expenses across accounts and cost centres and gives you the income statement in a click, this stops being a monthly exercise and becomes a number you can look at whenever you want. That is what Qoyod's accounting software does. If you would rather keep the calculation in a file, download the break-even analysis template. And for the term itself, see the break-even point definition.
Questions?
Quick answers to what owners ask before using a break-even in a real decision.
What is the break-even formula?
Break-even units equal fixed costs divided by the contribution margin per unit, where the contribution margin is the selling price minus the variable cost per unit. Break-even sales equal fixed costs divided by the contribution margin ratio.
What is the difference between a fixed and a variable cost?
A fixed cost does not change with sales volume during the period, such as rent, fixed salaries and subscriptions. A variable cost is spent on each unit sold, such as purchase cost, materials, packaging and sales commission. The test is whether it moves with activity, not how large it is.
How do I calculate break-even when I sell many products?
Use the second method in the calculator: enter total revenue and total variable costs for the same period, and it derives the blended contribution margin ratio and computes break-even sales in money. The result holds as long as the mix between items stays roughly stable.
What is a good margin of safety?
The margin of safety is how far your sales can fall before you start losing money. There is no single figure that suits every business, but the closer it gets to zero the more fragile you are to a weak season or a large customer who delays. Compare your number to your own previous months before comparing it to anyone else's.
Does the calculator convert between currencies?
No. It picks your currency automatically and lets you change it, but every field and every result stays in the same one, because a break-even is computed inside a single currency. There are no exchange rates in the tool and no conversion.
Should I enter amounts before or after tax?
Before tax. Tax collected from a customer is not your revenue: you collect it on the authority's behalf and remit it. Entering tax-inclusive amounts inflates revenue and gives you a break-even lower than the real one.