Break-Even Calculator

Understanding Break-Even Analysis

The break-even point is where total revenue equals total costs — the point at which a business moves from making a loss to making a profit. Break-even analysis is fundamental to business planning, pricing decisions, and investment appraisal.

Contribution Margin

The contribution margin is the selling price minus variable cost per unit. Each unit sold contributes this amount towards covering fixed costs and generating profit. A high contribution margin means you reach break-even faster with fewer sales.

Margin of Safety

The margin of safety is the gap between your actual (or forecast) sales and the break-even point. A higher margin of safety means the business is less vulnerable to a drop in sales. A margin of safety of at least 20-25% is considered healthy for most businesses.