Break-Even Calculator
Calculate your business break-even point in units and revenue, contribution margin per unit, and target profit sales requirements.
Cost & Pricing Inputs
£
£
£
£
Units
Break-Even Summary
Break-Even Sales Required
334 Units
Break-Even Revenue: £16,666.67
Unit Sale Price Breakdown
60.0% Margin Ratio
Contribution Margin (Profit Base)
Variable Cost
- Contribution Margin Per Unit £30.00 / unit
- Contribution Margin Ratio (CMR) 60.00%
- Units Needed for Target Profit 500 Units
- Revenue Needed for Target Profit £25,000.00
- Margin of Safety (Units) 116 Units (25.8%)
- Expected Net Profit / (Loss) £3,500.00
How to Perform a Break-Even Analysis
A break-even analysis identifies the exact point where total commercial revenues match total fixed and variable business costs. At this point, your business makes neither a profit nor a loss.
1. Break-Even Units Formula
Break-Even Units = Total Fixed Costs ÷ (Unit Price – Variable Cost per Unit)
2. Break-Even Revenue Formula
Break-Even Revenue = Break-Even Units × Unit Selling Price
Key Break-Even Components
- Fixed Costs Overheads that remain constant regardless of production volume (e.g., commercial rent, business rates, salaried staff, software subscriptions, insurance).
- Variable Costs Direct costs that fluctuate with output volume (e.g., raw materials, wholesale goods, packaging, courier delivery, e-commerce card fees).
- Contribution Margin The remaining revenue from each unit sold after deducting direct variable costs, which goes directly toward paying off fixed overheads.
- Margin of Safety The difference between your actual or forecasted sales volume and the break-even volume, representing your commercial buffer before incurring losses.
Frequently Asked Questions (Break-Even Analysis)
The break-even point is the specific level of sales volume (in units or total revenue) where total business income exactly equals total business expenditure, resulting in £0 net profit and £0 net loss.
Fixed costs (rent, insurance, baseline salaries) must be paid regardless of whether you make zero sales or 10,000 sales. Variable costs (raw materials, product shipping, packaging) scale directly up or down with every unit you produce and sell.
Increasing your selling price raises the unit contribution margin. This lowers the total number of units you need to sell to cover fixed overheads, reducing your commercial risk.
The Contribution Margin Ratio represents the percentage of each pound in sales that covers fixed costs. It is calculated as
(Selling Price - Variable Cost) ÷ Selling Price.
The Margin of Safety shows how much sales volume can drop before the business begins losing money. A higher margin of safety indicates greater resilience against economic downturns or supply chain disruptions.
For service businesses or consultancies, “units” can be defined as billable hours, project engagements, or monthly retainer clients. Variable costs include direct contractor fees or client software licenses.
To determine sales needed for a specific profit target, add the desired profit to your fixed costs:
Target Units = (Fixed Costs + Target Profit) ÷ Unit Contribution Margin.
Break-even analysis assumes unit costs and selling prices remain linear at all volumes, without considering bulk supplier discounts, seasonal price fluctuations, or multi-tiered product catalogs.
If your business is VAT-registered in the UK, conduct your break-even analysis using net figures (excluding VAT), since collected VAT is remitted to HMRC and input VAT on qualifying expenses is reclaimed.
Recalculate your break-even point quarterly, or whenever significant cost changes occur—such as rent renegotiations, supplier price hikes, staff hiring, or major product updates.
Official UK Business Links
Explore statutory business finance resources and startup planning guides on Gov.uk:
Disclaimer
Commercial Estimation Only
This calculator provides commercial projections based on linear cost assumptions. It does not account for stepped fixed costs, bulk supplier discounts, or complex multi-tiered product portfolios. Consult a qualified UK management accountant for official corporate forecasts.
