Question 1

What is the break-even point?

Accepted Answer

The break-even point is where total revenue equals total costs, resulting in zero profit or loss. It tells you how many units you need to sell (or revenue to generate) before your business starts making a profit. Below break-even, you're losing money; above it, you're profitable.

Question 2

How do I calculate the break-even point?

Accepted Answer

Break-Even Units = Fixed Costs / (Selling Price - Variable Cost per Unit). The (Selling Price - Variable Cost) is called the Contribution Margin. Example: $50,000 fixed costs, $100 price, $60 variable cost → Break-even = $50,000 / $40 = 1,250 units.

Question 3

What is contribution margin?

Accepted Answer

Contribution margin is the selling price minus variable cost per unit. It represents how much each unit sold contributes to covering fixed costs and generating profit. A higher contribution margin means you need fewer sales to break even.

Question 4

What are fixed costs vs variable costs?

Accepted Answer

Fixed costs stay the same regardless of sales volume: rent, salaries, insurance, depreciation. Variable costs change with each unit sold: materials, shipping, sales commissions. Understanding this distinction is crucial for accurate break-even analysis.

Question 5

Is this break-even calculator free?

Accepted Answer

Yes, this break-even calculator is completely free with no limits. No registration or credit card required. All calculations are performed in your browser for privacy.

Question 6

How do I calculate break-even in Excel?

Accepted Answer

In Excel: =FixedCosts/(SellingPrice-VariableCost). Example: =50000/(100-60) = 1250 units. For break-even revenue: =FixedCosts/(1-(VariableCost/SellingPrice)). You can also use Goal Seek to find break-even.

Question 7

What is margin of safety?

Accepted Answer

Margin of safety is how much sales can drop before you reach break-even. Formula: (Actual Sales - Break-Even Sales) / Actual Sales × 100. If you sell 1,500 units with 1,250 break-even, your margin of safety is 16.7%. Higher is safer.

Question 8

How many units do I need to sell to make a specific profit?

Accepted Answer

Use the formula: Units = (Fixed Costs + Target Profit) / Contribution Margin. Example: To make $20,000 profit with $50,000 fixed costs and $40 margin: (50,000 + 20,000) / 40 = 1,750 units needed.

Question 9

What if my variable cost is higher than my selling price?

Accepted Answer

If variable cost exceeds selling price, you have a negative contribution margin and can never break even - you lose money on every sale. You must either raise prices, lower variable costs, or reconsider your business model.

Question 10

How can I lower my break-even point?

Accepted Answer

Three ways to lower break-even: 1) Reduce fixed costs (renegotiate rent, automate). 2) Increase selling price (if market allows). 3) Reduce variable costs (better suppliers, efficiency). Each improvement lowers the volume needed to become profitable.

Question 11

Is break-even analysis useful for startups?

Accepted Answer

Absolutely! Break-even analysis helps startups understand how many customers/sales they need to cover costs. It's essential for business plans, investor pitches, and deciding if a business idea is financially viable before launching.

Question 12

How is this different from ElyxAI?

Accepted Answer

This free calculator handles basic break-even calculations. ElyxAI is a powerful AI assistant that works directly in Excel to build complete financial models, create what-if scenarios, automate cost analysis, and generate business projections. Try ElyxAI free for 7 days!

Units	Revenue	Total Cost	Profit/Loss
625	$62,500	$87,500	-$25,000
938	$93,800	$106,280	-$12,480
1,250 (Break-Even)	$125,000	$125,000	$0
1,563	$156,300	$143,780	$12,520
1,875	$187,500	$162,500	$25,000
2,500	$250,000	$200,000	$50,000

Break-Even Calculator

Break-Even Calculator

Results

Profit/Loss at Different Sales Levels

Understanding Break-Even Analysis

Frequently Asked Questions

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