Product Break-Even Calculator

The break-even point tells you exactly how many units you must sell before your business stops losing money and starts generating profit. It is one of the most important formulas in business planning.

Break-Even Units Formula:

BEU = Fixed Costs / (Selling Price Per Unit − Variable Cost Per Unit)

The denominator is the Contribution Margin Per Unit (CM):

CM = Selling Price − Variable Cost

Break-Even Revenue (in dollars):

BER = Fixed Costs / Contribution Margin Ratio

CM Ratio = CM / Selling Price

Worked Example, a handmade candle business:

• Monthly fixed costs: rent $800 + utilities $150 + insurance $100 = $1,050
• Selling price per candle: $18
• Variable cost per candle: wax $3 + wick $0.50 + jar $2 + label $0.25 = $5.75
• CM per unit = $18 − $5.75 = $12.25
• BEU = $1,050 / $12.25 = 85.7 → 86 candles/month
• CM Ratio = $12.25 / $18 = 68.1%
• BER = $1,050 / 0.6806 = $1,543/month

Two break-even revenue figures, and they differ by a candle. The formula above gives $1,543, which is what 85.7 candles would bring in. You cannot sell 0.7 of a candle, so the practical figure is 86 × $18 = $1,548. The calculator prints both: the exact one because it is what the formula says, and the whole-unit one because it is what the till actually rings up.

At 86 candles, you cover all costs exactly. Candle 87 onward = pure $12.25 profit.

Profit at 150 candles/month: Revenue = 150 × $18 = $2,700. Costs = $1,050 fixed + 150 × $5.75 = $1,912.50. Profit = $2,700 − $1,912.50 = $787.50/month

Do not take the shortcut of (150 − 86) × $12.25, which comes to $784. That subtracts the rounded-up break-even of 86 rather than the true 85.71, and it quietly undercounts by $3.50. The shortcut works only against the unrounded break-even point.

Key Insight: Lowering variable costs raises CM and lowers the break-even point. Bulk material purchases, for example, often yield the fastest path to profitability.

Cross-check against the pricing calculator. Our break-even pricing calculator works the same maths from the other end: give it the same fixed costs, the same variable cost, and the unit volume you expect, and its break-even price is exactly the price at which this page returns that volume. If the two disagree, one of the inputs is not what you think it is.