Accounting Break-Even Point (Monthly) Calculator
Calculate the monthly sales volume and revenue needed to cover fixed and variable business costs.
Overview
Use this monthly break-even point calculator to estimate the number of units and amount of revenue needed to cover your fixed costs. Enter your regular monthly overheads, average selling price, variable cost per unit and expected sales volume to see your break-even point and estimated monthly result.
How it works
The calculator first finds the contribution margin per unit by subtracting variable cost per unit from selling price per unit. It then divides monthly fixed costs by that contribution margin to estimate the sales volume required to break even. Break-even revenue is calculated by multiplying the required sales volume by the selling price. Your expected profit or loss is the contribution from expected sales less fixed costs.
How to use this calculator
- 1Enter your monthly fixed costs.
- 2Add the average selling price for one unit or sale.
- 3Enter the variable cost associated with each unit sold.
- 4Add your expected monthly unit sales.
- 5Review the break-even volume, required revenue and estimated monthly profit or loss.
Example Calculation
Monthly fixed costs
$10,000
Selling price per unit
$50
Variable cost per unit
$20
Expected monthly unit sales
500
Monthly break-even sales volume
/333 units
With fixed costs of 10,000, a selling price of 50 and variable costs of 20 per unit, the contribution margin is 30 per unit. The business breaks even at about 334 units, or roughly 16,667 in monthly revenue. At 500 unit sales, estimated monthly profit is 5,000.
Frequently asked questions
What is a monthly break-even point?
It is the sales level at which monthly revenue covers both fixed costs and the variable costs associated with those sales, leaving neither a profit nor a loss.
How is break-even volume calculated?
Monthly fixed costs are divided by contribution margin per unit. Contribution margin is the selling price per unit minus the variable cost per unit.
What costs count as fixed costs?
Typical fixed costs include rent, base salaries, insurance, subscriptions, depreciation and regular administration costs that do not usually change with each sale.
What costs count as variable costs?
Variable costs are direct costs that generally increase as more units are sold, such as materials, packaging, sales commissions, fulfilment and delivery.
Why is my break-even result negative or unusually high?
This can happen when variable cost is equal to or greater than the selling price, leaving no positive contribution from each sale to cover fixed costs. Check the prices and costs entered.
Does break-even revenue include tax?
This calculator uses the figures you enter and does not separately add taxes. Use consistent tax-inclusive or tax-exclusive figures according to your accounting approach.
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Assumptions and warnings
Assumptions
- All figures relate to one typical month.
- Fixed costs remain constant within the sales range being assessed.
- Variable cost per unit and selling price per unit are average values.
- The calculation excludes taxes, financing costs and any costs not entered.
- Results are estimates and should be reviewed when prices, costs or sales mix change.
Warnings
- This calculator provides an estimate only and is not accounting, tax or financial advice.
- Break-even is meaningful only when the selling price per unit is higher than the variable cost per unit.