Break-Even Calculator
This free break-even calculator works out your break-even point: how many units you need to sell, and how much in sales, to cover all your costs. It also draws a break-even chart, so you can see where a loss turns into a profit.
Enter your costs and selling price to see the break-even analysis and chart.
How to work out your break-even point
Your break-even point is the level of sales where your income exactly covers your costs. Below it you make a loss. Above it you make a profit. A break-even analysis splits your costs into two kinds:
- Fixed costs: bills you pay however much you sell, such as rent, insurance and software.
- Variable costs: what each extra unit costs you, such as materials, packaging and postage.
The break-even formula
- Contribution per unit (also called contribution margin) = selling price - variable cost per unit
- Break-even units = fixed costs ÷ contribution per unit, rounded up to a whole unit
- Break-even sales in pounds (also called break-even revenue) = break-even units × selling price
Use the same time period for everything. If your fixed costs are monthly, the answer is the number of units you need to sell each month.
Worked example: a small candle business
A small candle maker sells scented candles online.
- Fixed costs: £1,200 a month (studio rent, insurance and website)
- Variable cost: £6 per candle (wax, wick, jar, scent, label and box)
- Selling price: £18 per candle
- Contribution per candle: £18 - £6 = £12
- Break-even units: £1,200 ÷ £12 = 100 candles a month
- Break-even sales: 100 × £18 = £1,800 a month
Every candle sold after the 100th adds £12 of profit. At 150 candles a month the business makes 50 × £12 = £600 profit. Its margin of safety is (150 - 100) ÷ 150 = 33.3%, so sales could fall by a third before it makes a loss.
Type 1200, 6, 18 and 150 into the calculator above to see the same answer and chart.
How to use the break-even calculator
- Enter your fixed costs for a period, such as one month.
- Enter the variable cost of one unit.
- Enter your selling price for one unit.
- Optionally, enter how many units you sell now in the same period to see your margin of safety.
- Read your break-even units and sales, or press Copy Results to paste them into a document or email.
Reading the break-even chart
The break-even chart, or break-even graph, draws your sales line against your total cost line. The total cost line starts at your fixed costs, because you pay those before you sell anything. The dot where the two lines meet is your break-even point. To the left of it you make a loss, and to the right you make a profit.
The chart redraws as you type, so you can try different prices and costs and watch the break-even point move. There is no download button: to use the chart in a business plan or an email, take a screenshot.
Frequently asked questions
What is a break-even point?
The break-even point is the number of sales where your income exactly covers your costs, so you make neither a profit nor a loss. Sell more than this and you make a profit. Sell less and you make a loss.
How do you calculate the break-even point?
Take your selling price per unit and subtract the variable cost per unit. Then divide your fixed costs by the answer. For example, £1,200 of fixed costs ÷ (£18 - £6) = 100 units. Multiply the units by your price to get break-even sales in pounds: 100 × £18 = £1,800.
Why does the calculator round up to a whole unit?
The calculator counts whole units, such as cups of coffee, so it rounds up to the first whole number that covers your costs. A café with £2,500 of monthly fixed costs sells coffee at £3.20 and spends 90p on each cup, so each coffee contributes £2.30. £2,500 ÷ £2.30 = 1,086.96. At 1,086 coffees the café is still £2.20 short, so it has to sell 1,087 a month to break even.
Should I include VAT in my prices and costs?
If you are VAT registered, leave VAT out of both. You usually pay HMRC the difference between the VAT you charge customers and the VAT you pay on business costs, so VAT is neither income nor a cost for you. The exception is VAT you cannot reclaim, such as VAT on entertaining clients. That VAT is a real cost, so include it in your costs. If you are not VAT registered, you cannot charge or reclaim VAT, so use the prices you actually charge and include VAT in your costs. On the VAT Flat Rate Scheme you pay HMRC a fixed percentage of your sales including VAT, and you cannot reclaim most VAT on purchases. Use what you keep from each sale after paying HMRC as your price, and include VAT in your costs.
What is the margin of safety?
The margin of safety shows how far your sales could fall before you start making a loss. The calculator works it out as (current sales - break-even units) ÷ current sales. If you sell 150 candles a month and break even at 100, your margin of safety is 33.3%. A negative figure means you are selling below break-even.
Related tools
Setting your prices? Try the Profit Margin Calculator. Weighing up a new machine or advert? Use the ROI Calculator. Need prices with or without VAT? Use the VAT Calculator, or browse all financial tools.