Break-Even Point Calculator

Break-even point for a business

The break-even point (BEP) is the sales level where total revenue and total cost cancel out, so there's neither profit nor loss. To get it in units: BEP (un) = Fixed Cost / (Unit Price − Unit Variable Cost). For the figure in currency: BEP (R$) = Fixed Cost / Contribution Margin %, where contribution margin % = (Price − Variable Cost) / Price. Say your fixed cost runs R$ 10,000/month, you charge R$ 50, and each unit costs R$ 30 to make. That leaves R$ 20 of contribution margin per unit, or 40%. So BEP = 10,000 / 20 = 500 units per month, which works out to R$ 25,000 in revenue.

Once you clear the BEP, every extra unit hands its full margin straight to profit. Below it, each unit just digs the loss a bit deeper. There are a couple of variants worth knowing. The economic BEP folds the cost of equity capital into fixed cost. The financial BEP strips out non-cash items like depreciation, so it shows the point where cash actually turns positive.

Practical applications

In SME planning it's the figure you build sales targets around, and it tells you the smallest operation that can actually stand on its own. It shows up in product-launch calls (will demand clear the BEP?) and in pricing reviews. When the BEP asks for more than the addressable market can absorb, that's a sign the business model has to be rethought. Programs like BNDES PEAC and Sebrae credit analyses ask for break-even projections to gauge whether a borrower can repay. The number also settles insourcing-versus-outsourcing arguments: if bringing the work in-house needs a high volume just to break even, outsourcing usually wins out.

FAQ

What is the safety margin? It's how far your actual sales sit above the BEP, in percent: (Sales − BEP) / Sales. Anything past 30% means you have comfortable slack. Under 10% and a dip in demand can knock you into the red.

And in businesses with multiple products? Either weight the contribution margin by your sales mix and use that average, or run a separate BEP for each product line with fixed cost split proportionally.

Does the model handle stepped fixed cost? Not on its own. When a bigger volume forces new hires or more space, you have to redo the BEP tier by tier, plugging in the fixed cost that goes with each capacity band.