Break-Even Analysis Calculator
Full break-even analysis: break-even units and revenue, the volume for a target profit, and your margin of safety against expected sales.
How it works
Contribution = price − variable cost · Break-even units = fixed ÷ contribution · Units for target = (fixed + target profit) ÷ contribution · Margin of safety % = (expected − break-even) ÷ expected × 100
The contribution margin is what each sale adds toward fixed costs after covering its own variable cost. Dividing fixed costs by that contribution gives break-even; adding a target profit to fixed costs shows the volume needed to actually earn money. The margin of safety measures how far your expected sales sit above break-even — a cushion before losses begin. If the price is at or below variable cost, contribution is zero or negative and no volume breaks even.
Worked example
With $20,000 fixed costs, a $50 price and $30 variable cost, each unit contributes $20 (a 40% contribution margin ratio). Break-even is 20,000 ÷ 20 = 1,000 units, or $50,000 in revenue. Earning a $10,000 profit needs (20,000 + 10,000) ÷ 20 = 1,500 units, and expected sales of 1,500 units give a 33.3% margin of safety.
Frequently asked questions
What is the margin of safety?
It is how far your expected or actual sales exceed the break-even point, shown in units and as a percentage. A 33% margin of safety means sales could fall by a third before you start losing money — a larger cushion is safer.
How do I find the volume for a target profit?
Add the target profit to fixed costs, then divide by the contribution margin per unit. Treating the profit goal like an extra fixed cost is the standard cost-volume-profit approach.
Why must price exceed variable cost?
If price is at or below variable cost, each sale contributes nothing (or loses money) toward fixed costs, so no sales volume can ever break even. This calculator flags that case as an error.
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Educational estimate, not financial advice.