Cost Calculator AI
Business & StartupBreak-Even Analysis

Business Break-Even Calculator

Calculate unit sales volume and dollar revenue required to cover fixed operating overhead, along with margin of safety percentages on projected sales.

Cost Structure & Unit Economics

Projected Sales Volume (Optional)

Break-Even Point (BEP) Formulas

Break-Even Units = Total Fixed Costs / (Price - Variable Cost); Break-Even Revenue = Break-Even Units × Price; Margin of Safety % = (Projected - Break-Even) / Projected × 100
  • Unit Contribution Margin: Revenue generated per unit after covering direct variable manufacturing/delivery costs.
  • Margin of Safety: Buffer percentage sales can drop before the business begins operating at a net loss.

Step-by-Step Worked Example

Scenario: A business with $18,000/mo in fixed costs, selling units for $150 with $60 variable costs at 300 units projected sales

Calculation Steps:

  1. Unit Contribution Margin = $150 - $60 = $90.00 (60.0% CM Ratio)
  2. Break-Even Units = $18,000 / $90.00 = 200 units / month
  3. Break-Even Revenue = 200 × $150.00 = $30,000.00 / month
  4. Projected Profit = (300 × $90.00) - $18,000 = $9,000.00 / month
  5. Margin of Safety = ((300 - 200) / 300) × 100 = 33.3%
Result: Break-even is achieved at 200 units ($30,000/mo revenue). At 300 projected units, profit is $9,000 with a 33.3% margin of safety.

How to Use This Calculator

  1. 1Enter total monthly or annual fixed operating costs.
  2. 2Enter unit selling price and direct variable cost per unit.
  3. 3Optionally input projected sales volume to calculate expected profit and margin of safety.

Assumptions & Limitations

  • Fixed costs remain unchanged within the relevant operational range.
  • Selling price and unit variable cost remain constant regardless of order volume.

Frequently Asked Questions

What is a "Margin of Safety" in break-even analysis?

Margin of Safety represents the percentage by which sales can decline before reaching the break-even threshold and losing money. A 33% margin of safety means sales can drop by one-third safely.

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