Break-Even Calculator and Contribution Margin | Federico Calò
Calculate the break-even point, units, minimum revenue, and contribution margin. Enter fixed costs, price, and variable cost.
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Enter values and press the button to calculate.
Frequently Asked Questions
What is the break-even point?
The break-even point (or even point) is the sales volume at which total revenues equal total costs. Below that threshold the company incurs a loss; above it starts generating profit.
How is the contribution margin calculated?
The unit contribution margin is given by the selling price minus the variable costs per unit. Expressed as a percentage of the price, it becomes the margin ratio (CM ratio), useful for comparing different products.
What is the difference between fixed and variable costs?
Fixed costs (rent, salaries) remain constant with changes in production. Variable costs (raw materials, packaging) grow proportionally to units produced. This distinction is crucial for calculating break-even.
Does the calculator account for taxes?
No, the calculation is pre-tax. For a post-tax analysis, add the expected tax rate to fixed costs or reduce the contribution margin. Consult an accountant for a precise estimate.
How is it used?
- Enter fixed costs
Annual or monthly fixed costs total you support regardless of sales volume (rent, fixed salaries, depreciation).
- Set price and variable cost
Enter the selling price per unit and the variable cost per unit (raw materials, commissions, shipping). The contribution margin is the difference.
- Break-even point calculation
Click "Calculate" to get break-even units, turnover even, and contribution margin ratio.
- Interpret the results
The break-even point shows how many units you need to sell to cover all costs. Above that threshold, each unit generates profit.