Break-Even Calculator 2026
Calculate exactly how many units and how much revenue your business needs to break even and become profitable. Includes target profit analysis.
Last updated April 2026 · Sources: SCORE small business benchmarks, SBA business planning guides, Harvard Business School cost accounting frameworks
Your costs and pricing
Your break-even point
How break-even scales with price
Small price changes have a huge effect on break-even because they directly raise contribution margin. With $50,000 in fixed costs and $10 variable cost per unit, here is how price changes affect units needed.
| Price | CM per unit | CM ratio | Break-even units | Break-even revenue |
|---|---|---|---|---|
| $15 | $5 | 33% | 10,000 | $150,000 |
| $20 | $10 | 50% | 5,000 | $100,000 |
| $25 | $15 | 60% | 3,334 | $83,350 |
| $30 | $20 | 67% | 2,500 | $75,000 |
| $40 | $30 | 75% | 1,667 | $66,680 |
Going from $20 to $25 cuts break-even by 33%. Going from $25 to $30 cuts another 25%. Pricing is the most underused profit lever in small business.
Frequently Asked Questions
What is the break-even point?
The break-even point is the level of sales (in either units or revenue) at which your total costs exactly equal your total revenue — meaning you make zero profit and zero loss. Every sale beyond the break-even point contributes to profit. Every sale below it leaves you losing money. For a new business, the break-even point is one of the most important numbers to know because it tells you the minimum sales volume you need to keep the doors open.
How is break-even calculated?
Break-even units = Fixed Costs / (Price per unit − Variable cost per unit). The denominator is called the contribution margin per unit — the dollars from each sale that go toward covering fixed costs. With $50,000 in fixed costs, a $25 price, and $10 variable cost, each sale contributes $15 toward fixed costs. You need 50000 / 15 = 3,334 units to break even. At $25 per unit, that is $83,350 in revenue.
What is the difference between fixed and variable costs?
Fixed costs stay the same regardless of how much you sell — rent, salaried employees, insurance, software subscriptions, loan payments. Variable costs change with each unit you sell — raw materials, packaging, shipping, hourly labor for production, sales commissions. Some costs are mixed (utility bills are partly fixed, partly variable based on production). For break-even analysis, mixed costs are usually allocated as best you can or split into fixed and variable components.
What is contribution margin?
Contribution margin is the amount each sale contributes toward covering fixed costs and generating profit, calculated as price minus variable cost. If a $25 product has $10 of variable cost, the contribution margin is $15 per unit, or 60% of the sale price. The contribution margin ratio is more useful for service businesses where you sell hours or projects rather than discrete units. A higher contribution margin means you reach break-even faster and earn more profit on each additional sale.
How do I lower my break-even point?
Three options: reduce fixed costs (renegotiate rent, eliminate subscriptions, reduce salaried headcount), reduce variable costs (find cheaper suppliers, improve production efficiency), or raise prices (the most powerful lever, since it directly increases the contribution margin without changing your cost base). Most businesses default to fighting fixed costs, but raising prices by even 5-10% can dramatically lower the break-even point if your customers do not push back.
What is break-even revenue versus break-even units?
Break-even units is the number of items you need to sell. Break-even revenue is the dollar amount of sales those units generate. They are the same number measured differently. For service businesses or businesses with many products at different prices, break-even revenue is more useful because there is no single "unit" — you can think in terms of total dollars rather than discrete sales.
How do I calculate break-even with multiple products?
Use a weighted average contribution margin based on your sales mix. If 60% of sales are Product A (contribution margin $15) and 40% are Product B (contribution margin $25), the weighted average contribution margin is (0.6 × 15) + (0.4 × 25) = $19. Then divide fixed costs by this weighted average to get total break-even units. The downside is the calculation breaks if your sales mix shifts significantly, so refresh it whenever your product mix changes.
How long does it take a new business to break even?
Highly variable. SaaS startups often take 3-5 years to hit break-even because of upfront customer acquisition costs. A typical retail or service business with low startup costs might break even in 6-18 months. Restaurants average 18-24 months. Manufacturing or capital-intensive businesses can take 3-7 years. The key question is whether you have enough working capital to survive the period before break-even.
What is a target profit break-even calculation?
Instead of solving for zero profit, you solve for a specific profit goal. The formula becomes: Units = (Fixed Costs + Target Profit) / Contribution Margin. If you need $20,000 in annual profit on top of covering $50,000 in fixed costs at a $15 contribution margin, you need (50000 + 20000) / 15 = 4,667 units, generating $116,675 in revenue. This is more useful than vanilla break-even for setting realistic sales targets.
Why is break-even analysis important for pricing?
Because it tells you the absolute floor of what you can charge and still survive. If you cannot reach break-even at your current price even with reasonable sales volume, you need to either raise prices, cut costs, or change your business model — there is no other option. Many failing businesses keep cutting prices to drive volume, not realizing they are pushing themselves further from break-even by lowering the contribution margin.
What is the margin of safety?
Margin of safety is the amount your actual or projected sales exceed the break-even point, expressed as a dollar amount or percentage. If you break even at $100,000 in revenue and project $130,000 in sales, your margin of safety is $30,000 or 30%. A higher margin of safety means more cushion against bad months, economic downturns, or unexpected cost increases. Most businesses target a margin of safety of at least 20-30%.
Does break-even include taxes?
Standard break-even calculations ignore taxes because at the break-even point profit is zero, so income tax is also zero. For target profit calculations, you can either work with pre-tax targets or gross up your after-tax target by dividing by (1 − tax rate). If you want $20,000 in after-tax profit and your tax rate is 25%, you need (20000 / 0.75) = $26,667 in pre-tax profit, then add this to fixed costs for the calculation.
Sources: SCORE small business performance benchmarks, SBA business planning resources, Harvard Business School managerial accounting frameworks, AICPA cost accounting standards.
Disclaimer: Estimates only. Real-world break-even depends on actual sales mix, seasonality, and ability to maintain prices in competitive markets.