Formulas and sources
Each formula this calculator uses, where it comes from, and what it leaves out. "How it works" shows the same formula with your own numbers.
Break-even units
Simple mode
- Break-Even Units
- the units at which total revenue equals total cost
- Fixed Costs
- costs that stay the same however many units are sold
- (Price - Variable Cost)
- what each unit puts toward the fixed costs: its contribution margin
The units shown are rounded up to a whole unit. A price at or below the variable cost never breaks even, and the tool says so instead of giving a number.
Source: Uses the break-even formula in the SBA's guide [1] and in OpenStax (Franklin and colleagues, 2019) [2].
Break-even revenue
Simple mode
- Break-Even Units
- the exact units, before rounding up
- Price
- the selling price of one unit
Worked from the exact units, so it equals Fixed Costs ÷ Margin Ratio: $5,000 at a ratio of 2/3 is $7,500. Rounding the units up first would give 1,667 × $4.50 = $7,501.50.
Source: Uses the break-even sales formula in the SBA's guide [1] and in OpenStax [2].
Units for a target profit
Target Profit mode
- Units for Target Profit
- the units that earn the target, rounded up to a whole unit
- Target Profit
- the profit you want, before income tax
- (Price - Variable Cost)
- the contribution margin of one unit
OpenStax turns an after-tax goal into this pre-tax target first: divide it by (1 - tax rate) and enter the result. A target of zero gives the break-even units.
Source: Uses the target-profit formula in OpenStax [2].
Contribution margin and margin ratio
Simple and Target Profit modes
- Contribution Margin
- what one unit contributes, in money
- Price
- the selling price of one unit
- Variable Cost
- the cost that comes with each unit sold
- Margin Ratio
- the same, as a share of the price
OpenStax names the money and the percentage apart, as the results do.
Source: Uses the definitions in OpenStax [2]; the SBA's guide [1] gives the name contribution margin to the ratio.
Profit at a planned volume
Simple mode, with a Planned Sales Volume
- Profit
- the profit at that volume; below zero, a loss
- Planned Sales Volume
- the units you plan to sell
- Contribution Margin
- Price - Variable Cost
Source: Uses the contribution margin income statement in OpenStax [2].
Sources
- U.S. Small Business Administration. Plan your business, section "Calculate your startup costs", "Break-even point" and its "Tips and tricks". Undated page, read October 5, 2026.
- Franklin M, Graybeal P, Cooper D. Principles of Accounting, Volume 2: Managerial Accounting, chapter 3, sections 3.1 and 3.2 "Calculate a Break-Even Point in Units and Dollars". OpenStax, Rice University, 2019 (web edition read October 5, 2026).
What this calculator does not cover
- It models one product, or several as an averaged blend, and leaves out income tax and financing costs. Setting the price itself from a markup or a margin is the Markup & Margin Calculator's job.
- The SBA describes the break-even point as an estimate for a lender and a business plan, not an accounting figure.
Sources checked on .