Break Even Calculator

How to Use This Calculator

Step-by-Step Guide

1. Enter Fixed Costs: Input all monthly costs that remain constant regardless of sales volume (rent, salaries, insurance, utilities).
2. Enter Variable Cost Per Unit: Input the cost to produce or deliver each unit (materials, labor, shipping).
3. Enter Selling Price Per Unit: Input how much you charge for each unit.
4. Review Results: The calculator shows your break-even point in units and revenue, plus your contribution margin.
5. Analyze Scenarios: Adjust prices or costs to see how they affect your break-even point.

Example Scenario

Mike runs a landscaping business and wants to know how many lawns he needs to mow monthly to break even:

• Fixed Costs: $2,500/month (truck payment: $400, insurance: $300, equipment: $200, phone/internet: $100, his salary: $1,500)
• Variable Cost: $15 per lawn (gas: $5, maintenance: $3, supplies: $4, labor: $3)
• Price: $50 per lawn

Result: Mike needs to mow 72 lawns per month (about 18 per week) to break even. His contribution margin is $35 per lawn (70%).

If Mike mows 100 lawns: Revenue $5,000 - Variable Costs $1,500 - Fixed Costs $2,500 = $1,000 profit

Understanding Your Results

• Break-Even Point (Units): The number of units you must sell to cover all costs
• Break-Even Revenue: The total revenue needed to break even
• Contribution Margin: The amount each unit contributes to covering fixed costs (Price - Variable Cost)
• Contribution Margin %: The percentage of each sale available to cover fixed costs

Why This Matters

Knowing your break-even point helps you:

• Set realistic sales targets
• Price your products profitably
• Evaluate cost-cutting opportunities
• Make informed decisions about expansion
• Secure financing (lenders often ask for this)