Break-even point (BEP): the moment your business stops losing money

The break-even point is the sales level where your total revenue equals your total costs. Before break-even you’re operating at a loss; after break-even, every extra sale contributes to profit (assuming your costs behave the same way). If you run a small business, sell a product, freelance, or launch a SaaS, break-even is one of the fastest ways to answer: “How many do I have to sell before this is worth it?”

This calculator focuses on the most common break-even model: Fixed costs + variable costs per unit. Fixed costs are expenses that don’t change with volume (rent, core software, insurance). Variable costs increase with each unit sold (materials, shipping, payment processing, per-user support). Your product price creates revenue, and the difference between price and variable cost is your contribution margin. Break-even happens when your accumulated contribution margin covers your fixed costs.

• Contribution Margin (per unit): Price − Variable Cost
• Break-even Units: Fixed Costs ÷ (Price − Variable Cost)
• Contribution Margin Ratio: (Price − Variable Cost) ÷ Price
• Break-even Revenue: Fixed Costs ÷ Contribution Margin Ratio

If you sell services rather than “units,” treat a “unit” as a billable hour, a client project, or a subscription month. The logic stays the same: fixed costs must be covered by the margin generated by each unit of work.

Step-by-step (what your inputs do)

• Fixed costs are your baseline overhead. If you enter annual costs, the calculator converts to monthly.
• Price per unit is what customers pay for one unit (or one subscriber-month).
• Variable cost per unit scales with each unit (COGS, shipping, processing fees, per-unit support).
• Expected units sold estimates profit/loss and your margin of safety.
• Target profit (optional) shows the volume needed to hit a profit goal.

Under the hood, we compute contribution margin, then divide fixed costs by the margin to get the break-even units. If your margin is small (price barely above variable cost), break-even units jump dramatically. That’s why pricing, packaging, and cost control are often more powerful than “sell harder.”

Real-world break-even scenarios

You sell a planner for $25. It costs $9 to print and ship (variable cost). Your monthly fixed costs are $1,200.

• Contribution margin = 25 − 9 = $16 per planner
• Break-even units = 1,200 ÷ 16 = 75 planners
• Break-even revenue = 75 × 25 = $1,875

You charge $19/month. Variable costs per subscriber average $3/month. Fixed costs are $4,000/month.

• Contribution margin = 19 − 3 = $16 per subscriber-month
• Break-even subscribers = 4,000 ÷ 16 = 250 subscribers
• If you want $5,000 profit too: (4,000 + 5,000) ÷ 16 = 563 subscribers

You bill $120/hour. Your variable cost averages $20/hour. Fixed costs are $2,500/month.

• Contribution margin = 120 − 20 = $100 per hour
• Break-even hours = 2,500 ÷ 100 = 25 hours

That’s the minimum billable time required to cover overhead. Beyond that, you’re in profit territory (assuming costs stay stable).

How to reduce break-even fast

• Raise price (even slightly) if you have differentiation. It increases margin instantly.
• Reduce variable cost with better suppliers, shipping, packaging, or process changes.
• Cut fixed costs early-stage—subscriptions and “nice-to-haves” add up.
• Bundle or upsell to increase value per customer without equivalent cost increases.
• Stress-test your numbers: run pessimistic, realistic, optimistic scenarios.

Break-even is a model. If costs change with scale (bulk discounts, hiring, ad spend), update inputs as you grow.

Frequently Asked Questions

• What if my variable cost is higher than my price?

  Then your contribution margin is negative, meaning every unit sold increases your loss. You must raise price, reduce variable cost, or change the offering before break-even is possible.

• Does break-even include my salary?

  It can—if your salary is part of fixed costs. Many founders include a baseline salary so the business must sustain the owner. If you exclude it, your break-even looks easier but may not reflect reality.

• What’s the difference between break-even units and break-even revenue?

  Break-even units tells you how many sales/subscribers/hours you need. Break-even revenue tells you total sales dollars required. Revenue is useful for comparing businesses with different pricing structures.

• What is margin of safety?

  Margin of safety measures how much your planned volume exceeds break-even. If you expect 120 units and break-even is 75, your margin of safety is 45 units (or 37.5%). Higher is safer.

• Does break-even work for multiple products?

  Yes, but you need a weighted average contribution margin based on your sales mix. This calculator is designed for one primary product; for multi-product businesses, estimate an average margin or run separate scenarios.

• Is this the same as “break-even time”?

  Not exactly. Break-even time asks how many months until cumulative profit turns positive. You can approximate it by using monthly fixed costs and your expected monthly units.

Key terms (plain English)

• Fixed costs: costs that stay mostly the same regardless of sales volume (rent, base tools, insurance).
• Variable costs: costs that increase with each unit sold (materials, shipping, transaction fees).
• Contribution margin: how much one sale contributes toward fixed costs and profit.
• Contribution margin ratio: contribution margin divided by price (your margin percentage).
• Break-even point: the volume or revenue level where profit = 0.