Finance 2026-05-03 4 min read By Konvertibly Team

Break-Even Calculator: When Does Your Business Start Making Money?

Calculate your break-even point in units and revenue, understand the contribution margin, and use break-even analysis for pricing and capacity decisions.

Break-Even Analysis: The Foundation of Pricing Decisions

The break-even point is the level of sales at which total revenue exactly equals total costs — neither profit nor loss. Every unit sold above break-even generates profit; every unit below it generates a loss. Knowing your break-even is essential before launching a product, setting a price, or adding capacity.

Key Concepts

Fixed Costs: Costs that don't change with output (rent, salaries, software subscriptions)
Variable Costs: Costs that scale with each unit (materials, shipping, payment processing)
Contribution Margin: Revenue per unit − Variable cost per unit

Break-Even Formulas

Break-even (units) = Fixed Costs ÷ Contribution Margin per unit
Break-even (revenue) = Fixed Costs ÷ Contribution Margin ratio

Contribution Margin ratio = Contribution Margin per unit ÷ Selling price

Example

Fixed costs: £8,000/month
Selling price: £50/unit
Variable cost: £20/unit
Contribution margin: £30/unit

Break-even = £8,000 ÷ £30 = 267 units/month
Break-even revenue = 267 × £50 = £13,350/month

Using Break-Even for Decisions

Pricing: If you can't reach break-even at a given price, the price is too low or costs too high
New product: Estimate whether realistic sales volume exceeds break-even
Reducing costs: Every £1 reduction in fixed costs lowers break-even proportionally
Margin of safety: (Actual sales − Break-even) ÷ Actual sales — higher is more resilient

Calculate your break-even: Free Break-Even Calculator