What happens if selling price equals variable cost?

There is no contribution margin per unit, so each sale cannot help cover fixed costs. A break-even point cannot be calculated until price is above variable cost.

What is the difference between break-even and profit?

Break-even is the point where profit is zero. Profit begins when sales exceed the break-even volume and the contribution margin covers fixed costs.

Plan with a clear floor

Break-Even Calculator

Find how many units you need to sell before your revenue covers fixed and variable costs. Then see what your planned sales volume could earn.

01 Break-even units02 Revenue target03 Profit forecast

Your assumptions

Find your break-even point

Live

Contribution margin / unit

$30.00

Healthy margin

Break-even units66.67units to cover costs

Break-even revenue$3,333.33revenue to cover costs

Projected profit / loss$1,000.00at planned units

Target statusAbove break-evenbased on planned units

A quick read

Know the sales floor before you price.

Break-even analysis connects your fixed costs with the contribution created by each sale. It helps you set a practical sales target instead of guessing how much volume you need.

1
Add fixed costs
Include rent, salaries, software, insurance, or other period costs.
2
Describe one unit
Enter the variable cost and selling price for a single unit.
3
Compare the target
Review the break-even volume and projected result at your planned sales.

The math

Contribution turns costs into a target.

Contribution margin

Selling price − Variable cost

$50 − $20 = $30

Break-even units

Fixed costs ÷ Contribution margin

$2,000 ÷ $30 = 66.67

Projected profit

Contribution × Units − Fixed costs

$30 × 100 − $2,000 = $1,000

Important: break-even is only available when selling price is higher than variable cost. If the contribution margin is zero or negative, each additional sale cannot cover fixed costs.

Worked example

Cover $2,000 in fixed costs.

With a $20 variable cost and a $50 selling price, each sale contributes $30. You need 66.67 units, or 67 whole units, to move above break-even.

$2,000÷$30=66.67

Questions, answered

Break-even calculator FAQ

What is the break-even point?

The break-even point is the number of units or amount of revenue needed for total revenue to cover fixed and variable costs. Profit is zero at the exact point.

What if selling price equals variable cost?

There is no contribution margin, so sales cannot help cover fixed costs. The calculator will show that break-even is unavailable.

Should break-even units be rounded?

Use the exact decimal for analysis, then round up to the next whole unit when setting a real sales target. You cannot sell a fraction of a unit in many businesses.

What is contribution margin?

Contribution margin per unit is selling price minus variable cost per unit. It is the amount each sale contributes toward fixed costs and profit.