How to Calculate Your Business Break-Even Point
Launching a new product, service, or entirely new business comes with financial risk. Our Free Break-Even Calculator eliminates the guesswork by showing you exactly how many units you must sell—or hours you must bill—to cover your initial investments and start generating pure profit.
What is the Break-Even Formula?
The fundamental formula to find your break-even point in units is:
Break-Even Point = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)
For example: If you spend $5,000 on renting a storefront (Fixed Cost), it costs you $10 to make a t-shirt (Variable Cost), and you sell each shirt for $30 (Selling Price)... your break-even point is 250 shirts. Once you sell 251 shirts, you are officially a profitable business.
Expand Your Financial Toolkit
Finding your break-even point is just the beginning. Use our Pricing Calculator if you are struggling to define your optimal Selling Price, and our Sales Forecast Calculator to map out exactly how many months it will take to hit your break-even goal based on your expected monthly volume.
Frequently Asked Questions (FAQ)
Fixed Costs are expenses that do not change based on how much you sell (e.g., monthly rent, insurance, website hosting, salaried employees). Variable Costs change directly with your sales volume (e.g., raw materials, payment processing fees, shipping costs).
For freelancers or agencies, a "Unit" is often an "Hour" or a "Project". Enter your monthly overhead (software, rent) as Fixed Costs, your hourly wage or outsourced labor as Variable Cost, and your hourly billing rate as the Selling Price.