The break-even point is how many units you must sell to cover your costs — where total revenue equals total cost. It’s a simple division: fixed costs over the contribution margin (price minus variable cost per unit).
price − variable cost toward fixed costs; dividing fixed costs by that gives the break-even quantity.
The example
$10,000 fixed costs, $25 price, $15 variable cost.
| A | B | |
|---|---|---|
| 1 | Fixed costs | $10,000 |
| 2 | Price/unit | $25 |
| 3 | Variable cost/unit | $15 |
| 4 | Break-even units | 1,000 |
The formula
Units needed to break even:
How it works
Contribution margin is the key idea:
- Each unit sold contributes
price − variable cost=$25 − $15 = $10toward covering fixed costs (the contribution margin). - To cover
$10,000of fixed costs you need10000 / 10 = 1000units. - Below 1,000 units you lose money; above it you profit. Multiply by price for the break-even revenue (
1000 × $25 = $25,000). - Round up — you can’t sell a fraction of a unit to break even:
=ROUNDUP(B1/(B2-B3), 0).
Break-even with a profit target: add the desired profit to fixed costs — =(FixedCosts + TargetProfit) / (Price - VarCost) tells you the units needed to hit a specific profit, not just zero.
Try it: interactive demo
Set the numbers; see the break-even units.
Variations
Round up to whole units
You can’t sell a partial unit:
Break-even revenue
Units times price:
Units for a target profit
Add the profit goal:
Pitfalls & errors
Margin of zero or less. If variable cost ≥ price, you never break even — the denominator is zero or negative. Fix pricing or costs first.
Fixed vs variable costs. Only truly fixed costs go on top; per-unit costs go in the margin. Misclassifying them skews the result.
Round up, not down. Rounding 999.x down would leave you short of covering costs — always ROUNDUP for break-even units.
Practice workbook
Frequently asked questions
How do I calculate the break-even point in Excel?
How do I find break-even with a profit target?
What is the contribution margin?
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