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Break-Even Analysis Calculator
Operating Financials
$
$
$
Overhead Covered
Break-Even Point (Units / Hours)
360 units
Break-Even Sales Revenue
$27,000
Understanding Your Business Break-Even Point
A break-even analysis helps you calculate the precise point where your business revenues cover all of your operating expenses. Achieving break-even means your business is no longer operating at a loss, but has not yet registered a profit.
The Role of Fixed Costs vs. Variable Costs
To perform a break-even calculation, you must divide your expenses into two categories:
- Fixed Costs: Expenses that remain identical regardless of sales volume (e.g., office rent, business insurance, fixed salaries, web hosting).
- Variable Costs: Expenses that scale directly with production or sales volume (e.g., credit card transaction fees, raw materials, shipping costs).
Calculating Contribution Margin
The difference between the selling price of a unit and its variable cost is known as the Contribution Margin. By dividing your total annual fixed costs by the contribution margin, you find the exact number of units or billable hours you must sell to break even.