Marketing ROI
Break-Even Calculator
Your break-even point is fixed costs divided by the contribution margin per unit (price minus variable cost). With $3,000 of monthly fixed costs, a $50 price and $30 of variable costs, you break even at exactly 150 units — $7,500 of revenue. Enter your own costs and prices below.
How do you calculate the break-even point?
Break-even units = fixed costs ÷ (selling price − variable cost per unit). The denominator — price minus variable cost — is the contribution margin: the amount each sale contributes toward fixed costs. $12,000 of fixed costs with a $120 price and $70 variable cost gives a $50 contribution margin and a break-even point of 240 units, or $28,800 of revenue. Below that volume the business loses money; every unit above it adds $50 of profit.
How it works
Break-even analysis splits a business’s costs into two kinds. Fixed costs are owed whether you sell one unit or a thousand — rent, salaries, software, insurance. Variable costs ride along with each sale — materials, packaging, postage and per-sale platform fees. Each sale contributes its price minus its variable cost toward the fixed pile; the break-even point is where the pile is exactly covered. Whether you searched for a break-even calculator, a break even point calculator or a BEP calculator, the formula is:
Contribution margin per unit = price − variable cost per unitBreak-even units = fixed costs ÷ contribution margin per unitBreak-even revenue = break-even units × priceAdding a target profit is one extra step: units for target profit = (fixed costs + target profit) ÷ contribution margin. The calculator rounds units up, because you cannot sell a fraction of a unit and rounding down would leave you fractionally short.
What goes in fixed and variable costs
| Cost type | Examples | Common mistake |
|---|---|---|
| Fixed | Rent, salaries, software subscriptions, insurance, loan repayments | Forgetting your own salary — the business has not broken even if you worked for free |
| Variable | Materials, product cost, packaging, postage, marketplace and payment fees per sale | Leaving per-sale fees out of variable cost (Etsy takes ~9.5% + $0.45; Stripe ~2.9% + $0.30) |
| Contribution margin | Price minus variable cost per unit | Treating it as profit — it still has to cover all fixed costs first |
Source: Standard cost-accounting definitions (fixed vs variable costs and contribution margin), as taught in managerial accounting. Last verified: November 2026
Worked examples
Example 1 — a small online shop’s monthly break-even
| Fixed costs | $3,000.00 |
| Price per unit | $50.00 |
| Variable cost per unit | $30.00 |
| Contribution margin | $20.00 |
| Break-even point | 150 units |
| Break-even revenue | $7,500.00 |
Example 2 — a higher-priced service business
| Fixed costs | $12,000.00 |
| Price per unit | $120.00 |
| Variable cost per unit | $70.00 |
| Contribution margin | $50.00 |
| Break-even point | 240 units |
| Break-even revenue | $28,800.00 |
Example 3 — Example 1 plus a $2,000 monthly profit target
| Fixed costs + target profit | $5,000.00 |
| Contribution margin | $20.00 |
| Units needed | 250 units |
| Revenue at that volume | $12,500.00 |
Profit targets behave exactly like extra fixed costs in the formula — cover them the same way.
When these fees apply — and the limitations
Break-even analysis is deliberately simple, and its assumptions should be visible:
- It assumes one price and one variable cost. Businesses with many products should run it per product line, or with a realistic sales-weighted average margin.
- Costs are rarely perfectly fixed or variable — postage gets cheaper at volume, a second employee is a step in fixed costs. Re-run the numbers when a step changes.
- It ignores timing and cash flow. Breaking even over a year is not the same as surviving a slow quarter; seasonal businesses should calculate per period.
- It ignores taxes and financing costs unless you deliberately include them in fixed costs.
- Per-sale fees are the variable cost most often forgotten — a $50 sale on Etsy carries roughly $5 of fees, which belongs inside the $30 variable cost in Example 1, not outside the analysis.
Comparing your options
Break-even analysis and pricing are the same conversation from two ends: the markup calculator sets the price and margin per unit, and this page turns that margin into the volume you must sell. If your business runs on advertising, the break-even ROAS calculator applies the identical logic to ad spend.
Frequently asked questions
What is the break-even point in simple terms?
It is the level of sales where total revenue exactly equals total costs — no profit, no loss. Below it the business loses money; above it, each additional sale adds its contribution margin (price minus variable cost) as profit. It can be expressed in units (150 units) or in money ($7,500 of revenue).
How do I calculate break-even for a service business?
The same way, with the ‘unit’ being a billable hour, a project or a client. Fixed costs are your monthly overheads; variable cost per unit is whatever each hour or project directly costs you (subcontractors, software per seat, travel, and platform fees like Upwork’s 10% if the work comes through a platform). A freelancer charging $80 an hour with $8 of per-hour costs and $3,600 of monthly fixed costs breaks even at 50 billable hours a month.
What if my price is lower than my variable cost?
Then there is no break-even point: every sale loses money and selling more makes the loss bigger. The calculator will show a contribution margin of zero or less. The only fixes are raising the price, cutting the variable cost, or changing what is bundled into the sale.
Should platform and payment fees be in the variable cost?
Yes — they are charged per sale, which is the definition of a variable cost. An Etsy seller’s variable cost per unit should include the roughly 9.5% + $0.45 Etsy takes, and a Shopify seller should include the 2.9% + 30¢ processing. Leaving fees out flatters the break-even point and is the most common error in these calculations.
How often should I recalculate my break-even point?
Whenever a real input changes: a rent increase, a price change, a supplier’s new price list, or a platform fee change (marketplaces and processors adjust fees most years). For most small businesses, a quarterly recalculation with current figures is a healthy rhythm, plus an immediate one before any big decision like hiring.
Read the guide: How to Calculate Your Break-Even Point (With Examples) — fixed costs, contribution margin, and the units you must sell, step by step.
Related calculators
Estimates only. Platforms can change their fees at any time; always confirm the rate on the platform’s own pricing page before making pricing decisions. ToolFees is not affiliated with the platform named on this page.