Break-Even Revenue Calculator
The break-even revenue calculator tells you the minimum sales your business must generate to cover all of its costs. Every dollar of revenue below break-even represents a loss; every dollar above it contributes to profit. The calculation uses the contribution margin ratio, which is the proportion of each revenue dollar left after covering variable costs. Divide your total fixed costs by that ratio and you get the sales amount at which the business neither makes nor loses money. Small business owners use this figure to set sales targets, evaluate pricing changes, and decide whether a new product line is viable.
Break-even revenue formula
Contribution Margin Ratio = (Price - Variable Cost) / Price
Break-Even Revenue = Fixed Costs / Contribution Margin Ratio
Break-Even Units = Fixed Costs / (Price - Variable Cost)
For example, if fixed costs are $50,000, price is $100, and variable cost per unit is $40: the contribution margin ratio is ($100 - $40) / $100 = 0.60 (60%). Break-even revenue = $50,000 / 0.60 = $83,333.33. Break-even units = $50,000 / $60 = 833.33 units.
How to use your break-even figure
- Compare the break-even revenue to your current or projected sales to see how much cushion you have.
- Use it to set a minimum monthly sales target for your sales team.
- Model the effect of a price increase: a higher price raises the contribution margin ratio and lowers the break-even point.
- Evaluate cost-cutting: reducing fixed costs directly lowers the amount of revenue you need to survive.
- Assess new products: if projected sales are below break-even, reconsider pricing, variable costs, or whether to launch at all.
Frequently asked questions
What is the break-even point in revenue?
The break-even revenue is the total sales a business must generate to cover all fixed and variable costs, resulting in zero profit or loss. Above this level, the business is profitable; below it, there is a net loss.
What is the contribution margin ratio?
The contribution margin ratio is (Price - Variable Cost Per Unit) / Price. It represents the fraction of each sales dollar that remains after covering variable costs and is available to pay fixed costs and generate profit.
What counts as a fixed cost?
Fixed costs are expenses that do not change with the level of production or sales, such as rent, salaries, insurance premiums, loan payments, and depreciation. They remain constant in the short run regardless of how many units you sell.
What are variable costs?
Variable costs change in direct proportion to production volume. Examples include raw materials, direct labour per unit, packaging, and shipping. They rise as you produce and sell more.
How can I lower my break-even point?
You can lower your break-even point by reducing fixed costs (negotiating lower rent, for example), reducing variable costs per unit (sourcing materials more cheaply), or increasing your selling price to widen the contribution margin.
Official sources
- U.S. Small Business Administration: Calculate Your Startup Costs.
- IRS Publication 334: Tax Guide for Small Business.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.