What is the Break-Even Point?

The Break-Even Point (BEP) is the stage where total revenue equals total costs. At this point, there is zero profit and zero loss. Every sale made AFTER this point generates pure profit.

What is the difference between Fixed and Variable costs?

Fixed Costs (Overhead) remain the same regardless of sales (e.g., Rent $2,000/mo). Variable Costs increase with every unit sold (e.g., $5 to buy the T-shirt you enter sell).

What is Contribution Margin?

Contribution Margin is Selling Price minus Variable Cost per Unit. It represents the money from each sale that 'contributes' to paying down your fixed costs.

Break-Even Point Calculator | Profit Analysis Tool | Finmato

When Does Your Hobby Become a Business?

Every business starts in the red. You have to pay for rent, equipment, and inventory before you make your first sale. The Break-Even Point is that magical moment where your total sales revenue finally catches up to your total expenses. It is the finish line for "survival mode" and the starting line for "profit mode." Our calculator helps you find that line instantly.

Understanding the Components

To use this tool effectively, you must understand three key concepts:

Fixed Costs: Expenses that exist even if you sell NOTHING. Examples: Rent, insurance, loan payments, salaries of admin staff.
Variable Costs: Expenses directly tied to production. Examples: Raw materials, packaging, shipping, commission commissions.
Selling Price: The final price the customer pays for one unit.

The Break-Even Formula

Mathematically, the Break-Even Point (in units) is calculated as:

Break-Even Units = Fixed Costs / (Price per Unit - Variable Cost per Unit)

The denominator (Price - Variable Cost) is known as the Contribution Margin.

Startup Planning

Before seeking investors, you need to know: "We need to sell 500 subscriptions a month just to keep the lights on." This tool gives you that number.

Pricing Strategy

If your break-even volume is impossibly high (e.g., 10,000 units), you know you either need to raise your price or lower your variable costs.

New Product Launch

launching a new T-shirt line? If the printer charges $1,000 setup fee (fixed) and $10 per shirt (variable), and you sell for $20, you need to sell 100 shirts to break even.

Frequently Asked Questions

How do I lower my break-even point?

You have three levers: 1) Reduce Fixed Costs (cheaper rent), 2) Reduce Variable Costs (cheaper materials), or 3) Increase Selling Price. Any of these will mean you need fewer sales to profit.

Does this include taxes?

Typically, break-even analysis is done on an operating profit basis (EBITDA), so it excludes income tax. However, you should include property taxes or business licenses in your "Fixed Costs."

What if I have multiple products?

This calculator is best for a single product or an "average" product. For multi-product businesses, calculate the weighted average contribution margin across your portfolio.

Financial Disclaimer

This tool provides a theoretical model based on your inputs. Real-world results are affected by market demand, competition, and unforeseen costs.

Data Privacy

Your business data is sensitive. We do not store or track your inputs. All calculations happen locally.

Break-Even Calculator