Break-Even Calculator

Find the point where sales cover your costs — and how much further you need to go to make a profit.

Fixed costs

Costs that do not change with sales volume, for the period you are measuring.

Selling price per unit

Variable cost per unit

Materials, packaging, delivery, card fees and anything else that scales with each sale.

Target profit (optional)

Break-even sales

1,000 units

Contribution per unit: £30.00
Contribution margin: 60%
Break-even revenue: £50,000.00

What this means

Every sale contributes £30.00 towards your fixed costs. You need 1,000 sales, or £50,000.00 of revenue, before the business starts making a profit. Anything sold beyond that point adds the contribution straight to profit.

Quick answers

What is break-even?: Break-even is the point where total sales revenue exactly equals total costs, so profit is zero. Below it you make a loss; above it, each further sale adds profit.
How do I calculate break-even units?: Divide fixed costs by contribution per unit (selling price minus variable cost per unit). Fixed costs of £30,000 with a £7 contribution per unit need 4,286 units to break even.
What are fixed costs and variable costs?: Fixed costs — rent, salaries, insurance — stay the same regardless of sales volume. Variable costs — materials, packaging, card fees — rise and fall with each sale you make.
How do I calculate sales needed for a target profit?: Add the target profit to fixed costs, then divide by contribution per unit. To earn £14,000 profit with a £7 contribution and £30,000 fixed costs, you need (£30,000 + £14,000) ÷ £7 = 6,286 units.

Use break-even as a planning number

Break-even shows the sales level needed to cover costs. It is a floor, not a target.

Alongside it, plan for the profit you want, a cash reserve and the unexpected costs that most businesses meet at some point.

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How we calculated it

Contribution per unit = selling price − variable cost per unit. Break-even units = fixed costs ÷ contribution per unit, rounded up because you cannot sell part of a unit.

Break-even revenue = break-even units × selling price. For a profit target, units = (fixed costs + target profit) ÷ contribution per unit.

Assumptions

One product or a consistent average price and cost, all fixed costs covering the same period as the figures entered, and no discounts, returns or stock write-offs. Figures exclude VAT.

How this calculator works

Fixed costs stay the same whatever you sell — rent, salaries, insurance, subscriptions. Variable costs move with each sale: materials, packaging, delivery, card fees, commission. The gap between your price and the variable cost is contribution, and it is the money available to pay off the fixed costs. If card fees are part of your variable cost, the card processing fee calculator will give you an accurate per-sale figure to use here.

If contribution is zero or negative, there is no break-even point: every extra sale makes the loss bigger, and the answer is a price rise or a cheaper input rather than more volume. The margin calculator can help you work out what price is needed to restore a healthy contribution.

Worked examples

Café-roastery selling bags of coffee

Fixed costs are £30,000 a year. A bag of coffee sells for £12 and costs £5 in beans, packaging and postage. Contribution is £7 a bag, a contribution margin of 58.3%.

Break-even is £30,000 ÷ £7 = 4,286 bags, or £51,432 of sales. To make £14,000 profit for the owner, sales need to reach (£30,000 + £14,000) ÷ £7 = 6,286 bags.

Mobile hairdresser with a £6,000 profit target

A mobile hairdresser has fixed costs of £12,000 a year — insurance, kit, a website and a phone contract. Each appointment is priced at £45 and costs £15 in products and travel, giving a contribution of £30 a booking (a 66.7% contribution margin).

Break-even is £12,000 ÷ £30 = 400 bookings, or £18,000 of revenue. To also draw £6,000 of profit, bookings need to reach (£12,000 + £6,000) ÷ £30 = 600 bookings, generating £27,000 of revenue.

Key terms explained

Contribution per unit: Selling price minus variable cost per unit. It is the amount each sale contributes towards paying off fixed costs, before any of it becomes profit.
Contribution margin: Contribution per unit expressed as a percentage of the selling price. A higher contribution margin means fewer sales are needed to cover the same fixed costs.
Fixed costs: Costs that do not change with how much you sell, such as rent, salaries, insurance and subscriptions, for the period being measured.

Common mistakes

Leaving out costs that scale with sales
Card processing fees, delivery and commission are variable costs, not fixed ones. Missing them out understates variable cost and makes break-even look lower than it really is.
Using turnover instead of contribution
Break-even is driven by contribution (price minus variable cost), not by revenue alone. Two businesses with the same turnover can have very different break-even points if their variable costs differ.
Forgetting to include the owner's own pay
If you draw a regular salary through payroll, it is a fixed cost the business must earn before breaking even. Leaving it out understates how much you actually need to sell.
Assuming break-even units, not price, will fix a loss
If the selling price is below the variable cost, no amount of extra volume closes the gap — each sale loses more money. The fix is a higher price or a lower cost per unit, not more sales.

Common questions

What is contribution margin?

Contribution margin is contribution per unit expressed as a percentage of the selling price. A £12 product with £5 of variable costs has a £7 contribution and a 58.3% contribution margin, meaning 58.3p of every pound of sales is available to cover fixed costs.

Should the owner's salary be a fixed cost?

If you take a regular salary through payroll, include it in fixed costs — the business has to earn it before it breaks even. If you take profits as dividends or drawings, leave it out and use the profit target field instead.

What if my prices vary?

Use a weighted average selling price and average variable cost across the products you actually sell. The break-even figure is then expressed in average units, and the revenue figure is usually the more useful number.

Why can't I break even when the price is below the variable cost?

Because each sale loses money before fixed costs are even considered. No volume of sales can close that gap, so the only fixes are to raise the price or reduce the cost of producing each unit.

How can I lower my break-even point?

Either reduce fixed costs, reduce variable cost per unit, or raise the selling price — any of these increases contribution or reduces what it has to cover. Cutting a fixed subscription or renegotiating a supplier price often has a bigger effect than chasing more sales volume.

What happens if selling price equals variable cost?

Contribution is zero, so no volume of sales will ever cover fixed costs — there is no break-even point. The price needs to rise, or the variable cost needs to fall, before break-even becomes possible at all.

Last reviewed: 7 September 2026. This calculator is information only and is not tax, accounting or financial advice.