Break-Even Analysis Calculator

It's the number of units (or the matching revenue figure) where total revenue exactly equals total costs — fixed costs plus variable costs — so profit is zero. Sell fewer units than that and the business loses money on the period; sell more and each additional unit's contribution margin becomes pure profit, since fixed costs are already covered.

Break-even is a fixed target — the exact unit count where profit hits zero — while margin of safety measures the distance between that target and your actual current sales, expressed as both a unit count and a percentage. A large margin of safety means sales could fall substantially before the business dips into a loss; a small one means the business is closer to the edge than the raw profit figure alone would suggest.

A higher price per unit widens the contribution margin — the gap between what a unit sells for and what it costs to make — so each unit sold covers more of your fixed costs. Since break-even units equals fixed costs divided by that margin, a wider margin means fewer units are needed to reach the point where fixed costs are fully covered, all else held equal.

CM Ratio is contribution margin (price minus variable cost) expressed as a percentage of price, and it only accounts for variable costs — it says nothing about whether fixed costs have been covered yet. Profit Margin (reported here as a percentage of total revenue) reflects true bottom-line profit after both fixed and variable costs, so a healthy CM Ratio can still coexist with a low or negative profit margin if fixed costs are high relative to sales volume.