Calculate break-even units and revenue, contribution margin, forecast profit or loss, and the sales required for a target profit.
Results are planning estimates. Actual costs, prices, sales mix, tax and timing can change the outcome.
How to use the Break-Even Calculator
Enter your total fixed costs, selling price and variable cost for one unit. Add expected unit sales to estimate profit or loss at that volume, and enter a target profit to see the required sales quantity. Use figures from the same accounting period and treat VAT consistently.
Break-even formulas
| Result | Formula |
|---|---|
| Contribution per unit | Selling price − variable cost per unit |
| Contribution margin | Contribution per unit ÷ selling price × 100 |
| Break-even units | Fixed costs ÷ contribution per unit, rounded up |
| Break-even revenue | Break-even units × selling price |
| Target-profit units | (Fixed costs + target profit) ÷ contribution per unit, rounded up |
Fixed and variable costs
Fixed costs may include rent, insurance, core salaries and software subscriptions. Variable costs rise as more units are sold and can include materials, packaging, payment fees and unit-based commission. Classifying mixed costs consistently makes the estimate more useful.
Understanding contribution margin
Contribution is the amount from each sale available to cover fixed costs and then profit. A positive contribution is essential: if variable cost equals or exceeds selling price, selling more units will not create a conventional break-even point.
Using the result for business planning
Compare required unit sales with realistic demand and capacity. You can test different prices or costs, then use the ROI Calculator to compare returns and the Business Valuation Calculator for a broader estimate. The Business Rates Calculator UK may help when estimating property-related overheads. Browse every tool on the United Kingdom Calculator homepage.
The British Business Bank business finance glossary provides plain-English explanations of common finance terms, including break-even and fixed costs.
Frequently asked questions
What is the break-even point?
It is the sales level at which total contribution covers fixed costs, so the simplified model shows neither profit nor loss.
Why must selling price exceed variable cost?
Each unit needs a positive contribution towards fixed costs. Otherwise, additional sales do not move the business towards break-even.
Why are break-even units rounded up?
A fraction of a unit is normally not saleable, so the calculator rounds up to the first whole unit that covers fixed costs.
Should I include VAT?
Use a consistent basis. VAT-registered businesses often model net figures, but an accountant can advise on the right treatment for your circumstances.
Can I use this for several products?
This version assumes one average selling price and variable cost. A multi-product business needs a stable sales-mix assumption or a separate calculation for each product.