Enter the total fixed costs of your project or good and the total sale price per unit sold to calculate the total number of units needed to break even.

Break Even Point Formula

The formula for calculating the break-even point of a business or good is the following. 

BP = TFC / (RPU-CPU)
  • Where BP is the break-even point in units sold
  • TFC is the total fixed costs
  • RPU is the total revenue per unit sold
  • CPU is the total cost per unit produced

To calculate a break even point, divide the total fixed costs by the difference between the revenue per unit sold and the cost per unit sold.

Break Even Point Definition

A break-even point is defined as the exact quantity or monetary value in which a certain business or product becomes profitable. That is the revenue outweighs the costs.

How to calculate a break even point

Let’s look at an example of how you might calculate the break-even point of a good.

First, you must determine the total fixed costs. Typically this is equal to the total number of units multiplied by their cost. More often you need to include the operational and distribution costs.

Next, you must determine the cost of a unit. This is usually chosen and can be manipulated to adjust the break-even point.

Finally, enter the values into the break-even point calculator above, and you have your answer.

FAQ

What is a break even point?

A break-even point is defined as the exact quantity or monetary value in which a certain business or product becomes profitable. That is the revenue outweighs the costs.