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Break-Even Point Calculator UK | UK Creative Ventures
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Break-Even Point Calculator

Calculate your break-even point in units and revenue. Model the impact of changing your price, fixed costs or variable costs with interactive sliders and see your profit and loss at any sales volume.

Units + revenue break-even What-if scenario planner Free, no sign-up
Free business calculator · Works for product businesses, service businesses and SaaS
UK Creative Ventures · Break-Even Calculator
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Price you charge per product or service
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Materials, direct labour, packaging, delivery
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Rent, salaries, software, insurance, costs that don't change with volume
How many units you currently sell per month
Break-even point
300 units
£15,000 in monthly revenue
Contribution margin
£30
CM ratio
60%
Margin of safety
25%
Revenue vs costs at different sales volumes
Total costs Revenue Break-even point
Current profit/loss
£3,000
Units above break-even
100
% of fixed costs covered
133%

Compare your current break-even against three alternative scenarios, useful for evaluating a price change, cost reduction or expansion into a new cost structure.

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Scenario A

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Scenario B

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Scenario C

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Work backwards from a profit target. Enter how much profit you need and find out exactly how many units you need to sell or what price you need to charge.

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Units needed for target profit
467
Revenue needed
£23,333
vs break-even units
+167
💡 Formula: Units for target profit = (Fixed Costs + Target Profit) ÷ Contribution Margin per Unit. The contribution margin is your selling price minus variable cost per unit.

What is the break-even point?

The break-even point is the sales volume at which your total revenue exactly equals your total costs, leaving zero profit and zero loss. Every unit sold above the break-even point generates profit; every unit below it generates a loss. It is one of the most fundamental calculations in business planning, pricing decisions and investment appraisal.

Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit
Break-Even Revenue = Fixed Costs ÷ Contribution Margin Ratio

Worked example: break-even calculation A Bristol gift retailer sells handmade candles at £35 each. Variable cost per candle: £12. Monthly fixed costs: £6,900.

Contribution margin per unit: £35 − £12 = £23
Break-even units: £6,900 ÷ £23 = 300 candles/month
Break-even revenue: 300 × £35 = £10,500/month
If they sell 400 candles: Profit = (400 − 300) × £23 = £2,300

Fixed costs vs variable costs

Understanding the distinction between fixed and variable costs is essential for an accurate break-even calculation.

  • Fixed costs remain constant regardless of how many units you produce or sell. They include rent, salaries, insurance, software subscriptions, loan repayments and depreciation. Fixed costs do not disappear if sales fall to zero, you pay them regardless.
  • Variable costs change directly with production volume. They include raw materials, direct labour (for piece-rate workers), packaging, shipping and sales commissions. If you produce nothing, variable costs are zero.
  • Semi-variable costs have both a fixed and variable element, for example, a utility bill with a standing charge plus a per-unit rate. For break-even analysis, split these into their fixed and variable components.

Contribution margin - the key metric

The contribution margin is the selling price minus the variable cost per unit. It represents the amount each unit "contributes" towards covering fixed costs and ultimately generating profit. Once you have sold enough units to cover all fixed costs, every additional unit's contribution margin becomes pure profit.

The contribution margin ratio (CM ratio) expresses the contribution margin as a percentage of the selling price. A CM ratio of 60% means that for every £1 of revenue, 60p goes towards fixed costs and profit.

Margin of safety

The margin of safety is the difference between your current sales volume and the break-even point, expressed as a percentage of current sales. It tells you how much your sales could fall before you start making a loss.

Margin of Safety = (Current Sales − Break-Even Sales) ÷ Current Sales × 100

A margin of safety below 20% suggests the business is vulnerable to even small drops in sales. Above 40% indicates a comfortable buffer. Use the margin of safety as a key risk indicator when making decisions about investment or cost increases.

Using break-even analysis for pricing decisions

Break-even analysis is a powerful pricing tool. If you are considering a price reduction to drive volume, you can calculate exactly how many additional units you need to sell to maintain the same profit level. Conversely, a price increase reduces the number of units required to break even, but may reduce demand.

Pricing decision - impact of a 10% price cut Current: Price £50 · VC £20 · Fixed costs £9,000 · Break-even: 300 units

After 10% price cut to £45: CM = £45 − £20 = £25
New break-even: £9,000 ÷ £25 = 360 units (+20% more units needed)

A 10% price cut requires 20% more volume just to break even, before generating any additional profit.

Break-even analysis for service businesses

Break-even analysis works equally well for service businesses, with a few adaptations. For a service business, the "unit" might be a client, a project, an hour of work, or a monthly retainer. Variable costs typically include any subcontractor costs or time-based labour directly associated with delivering the service. Fixed costs include all overhead that exists regardless of how many clients you serve.

Frequently asked questions about break-even analysis

The break-even point in units is calculated as: Fixed Costs ÷ Contribution Margin per Unit, where Contribution Margin = Selling Price − Variable Cost per Unit. The break-even point in revenue is: Fixed Costs ÷ Contribution Margin Ratio, where CM Ratio = Contribution Margin ÷ Selling Price. For example, with fixed costs of £9,000, a selling price of £50 and variable cost of £20, the break-even point is £9,000 ÷ £30 = 300 units, or £15,000 in revenue.
The contribution margin is the selling price minus the variable cost per unit. It represents how much each sale contributes towards covering fixed costs and generating profit. For example, if you sell a product for £50 with variable costs of £20, the contribution margin is £30. Once you have sold enough units to cover all fixed costs, each additional unit's full contribution margin of £30 becomes profit.
The margin of safety measures how far your current sales are above the break-even point, expressed as a percentage. If you sell 400 units and your break-even is 300 units, your margin of safety is (400−300)÷400 = 25%. This means sales could fall by 25% before you start making a loss. A margin of safety below 20% is considered risky; above 40% suggests a comfortable buffer.
There are three ways to lower your break-even point: increase your selling price (which raises the contribution margin per unit); reduce your variable costs per unit (through better supplier terms, process efficiency, or product redesign); or reduce your fixed costs (through renegotiating leases, reducing overheads, or restructuring). Each approach has trade-offs, use the Scenario Planner tab in the calculator to model the impact of each option for your specific numbers.
Break-even analysis is used for: setting minimum pricing; evaluating whether a new product or service is viable; assessing the risk of a business before launch; making investment decisions (will the additional fixed cost be covered by the extra revenue?); evaluating the impact of a price change on profitability; and planning sales targets. It is one of the core tools used in business plans and investor presentations.
Break-even analysis makes several simplifying assumptions: that selling price is constant at all volumes (it ignores bulk discounts or volume pricing); that variable costs are perfectly linear (in practice, there may be economies of scale); that fixed costs remain truly fixed (in reality, they may step up at certain volume thresholds); and that all units produced are sold. These limitations mean break-even analysis is most useful as a planning tool and directional guide rather than a precise forecast.
For businesses with multiple products, break-even analysis becomes more complex because you need to assume a fixed sales mix. The weighted average contribution margin approach calculates a blended CM ratio based on the proportion of each product in your total sales, then divides fixed costs by this weighted average. Alternatively, you can calculate break-even separately for each product line if they have truly independent fixed cost bases.
Break-even analysis finds the sales volume at which profit is zero. Profit target analysis extends this by asking how many units you need to sell to achieve a specific profit level. The formula is: Units for target profit = (Fixed Costs + Target Profit) ÷ Contribution Margin per Unit. For example, to make £5,000 profit with fixed costs of £9,000 and a CM of £30: (£9,000 + £5,000) ÷ £30 = 467 units needed. Use the Profit Target tab in the calculator above.
Yes — break-even analysis is particularly valuable for startups because it forces clarity on the minimum viable scale of the business. Before launching, knowing your break-even point in units and revenue tells you whether your target market is large enough, whether your pricing model is viable, and how long you can sustain losses before the business becomes profitable. Investors and lenders typically expect to see a break-even analysis in any business plan or pitch deck.
For a SaaS business, the "unit" is typically a monthly subscription (MRR per customer). Variable costs include customer support costs, payment processing fees, and any per-customer infrastructure costs. Fixed costs include product development salaries, office costs, tools and marketing overhead. The break-even point tells you the minimum number of customers (or MRR level) needed to cover your fixed cost base, a critical metric for SaaS runway planning.

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