Break-Even Point Calculator
Find out exactly how many units you need to sell to start making a profit
What is a Break-Even Point?
A break-even point (BEP) is the point at which total costs equal total revenue, resulting in neither profit nor loss. In other words, it's the threshold at which your business begins to make money. Understanding your break-even point is crucial for financial planning, pricing strategy, and evaluating business viability.
How to Use This Calculator
- Enter your fixed costs - These are expenses that don't change regardless of production volume (rent, salaries, insurance, etc.)
- Input your variable cost per unit - These are costs that change with production volume (materials, direct labor, packaging)
- Set your sale price per unit - The amount you charge customers for each product or service
- Add expected monthly sales (optional) - If you have a sales target, enter it to see projected profit or loss
- View your results - The calculator instantly shows your break-even point in units and dollars
Frequently Asked Questions
How is break-even point calculated?
The break-even point in units is calculated by dividing fixed costs by the contribution margin per unit (selling price per unit minus variable cost per unit):
Break-Even Units = Fixed Costs รท (Sale Price - Variable Cost)
Break-Even Units = Fixed Costs รท (Sale Price - Variable Cost)
Why is understanding my break-even point important?
Knowing your break-even point helps you set sales targets, determine pricing strategies, evaluate new projects, manage costs, and make informed decisions about production volumes. It's an essential metric for financial planning and business sustainability.
What happens if my variable cost is higher than my selling price?
If your variable cost exceeds your selling price, you'll lose money on each unit sold, making it impossible to break even regardless of sales volume. In this case, you'll need to either increase your price or find ways to reduce variable costs.
Can break-even analysis help with pricing decisions?
If your variable cost exceeds your selling price, you'll lose money on each unit sold, making it impossible to break even regardless of sales volume. In this case, you'll need to either increase your price or find ways to reduce variable costs.
How often should I recalculate my break-even point?
It's good practice to recalculate your break-even point whenever there are significant changes to your business, such as changes in fixed costs (like rent increases), variable costs (such as material price changes), or when you're considering price adjustments.
What types of businesses fit the SaaS Startup template?
The SaaS (Software as a Service) template is ideal for subscription-based software companies. This includes business tools, productivity apps, B2B solutions, CRM systems, marketing automation platforms, and any other cloud-based software with a recurring revenue model. These businesses typically have higher fixed costs (development, hosting) but lower variable costs per user.
When should I use the Mobile App template?
The Mobile App template is suited for consumer or enterprise mobile applications that generate revenue through in-app purchases, freemium models, or direct sales. This includes gaming apps, utility apps, lifestyle apps, and specialized mobile tools. Mobile apps typically have lower fixed costs than enterprise SaaS but may require significant marketing investment to acquire users.
What kind of businesses does the Marketplace template represent?
The Marketplace template works well for platforms that connect buyers and sellers, charging a commission or transaction fee. Examples include service marketplaces (like freelancer platforms), product marketplaces, rental platforms, or peer-to-peer exchanges. Marketplaces typically have moderate to high fixed costs for platform development and maintenance, and variable costs related to transaction processing and user acquisition.
Who should use the E-commerce template?
The E-commerce template is designed for businesses that sell physical or digital products directly to consumers online. This includes direct-to-consumer brands, online retailers, specialty stores, subscription boxes, print-on-demand services, and digital product sellers. E-commerce businesses typically have moderate fixed costs (website, staff, warehousing) and significant variable costs related to inventory, packaging, shipping, and payment processing. This model works for both single-product businesses and those with extensive catalogs.
What does the Fintech template cover?
The Fintech template is designed for financial technology startups like payment processing solutions, digital banking, lending platforms, investment apps, cryptocurrency services, and insurtech offerings. Fintech startups typically have higher fixed costs due to regulatory compliance requirements and security infrastructure, plus variable costs related to transaction processing and risk management.
Is the Hardware/IoT template right for my physical product startup?
The Hardware/IoT template is appropriate for companies developing physical technology products, smart devices, connected hardware, wearables, and Internet of Things (IoT) solutions. These businesses have significantly higher unit costs compared to software-only startups due to materials, manufacturing, assembly, and logistics. They also typically require substantial upfront investment in product development, tooling, certification, and inventory.
What kinds of startups should use the B2B Enterprise template?
The B2B Enterprise template is ideal for startups selling high-value solutions to other businesses, typically with longer sales cycles and higher price points. This includes enterprise software, specialized business services, industrial tech solutions, and B2B platforms. These businesses often have higher customer acquisition costs but also higher customer lifetime value, with pricing often in the thousands or tens of thousands per client.
How do I choose the right template for my startup?
Choose the template that most closely aligns with your business model, target market, and cost structure. Consider:
- Your primary revenue model (subscription, one-time purchase, transaction fees)
- Whether you're selling software, physical products, or services
- Your target customer (consumers, small businesses, or enterprise)
- Your major cost drivers (development, manufacturing, marketing)
How do startup categories affect investor expectations?
Different startup categories typically have different investor expectations regarding:
- Growth rates: SaaS and marketplace investors often expect faster growth than hardware
- Margins: Software businesses are expected to have higher gross margins than hardware
- Capital efficiency: Software typically requires less funding per dollar of revenue
- Time to market: Physical product startups usually have longer development timelines
- Unit economics: Each business model has different benchmarks for customer acquisition costs and lifetime value