Free Break-Even Analysis Calculator — Units, Revenue & Chart
Classic break-even chart — where does total revenue cross total costs? Essential for pricing decisions and business plans.
Last updated: January 2026
Break-Even Analysis Chart
What is break-even analysis?
Break-even analysis determines the point at which your total revenue equals your total costs — the moment your business stops losing money and starts turning a profit. The formula is: Break-Even Units = Fixed Costs / (Selling Price - Variable Cost per Unit). The denominator — Selling Price minus Variable Cost — is called the contribution margin per unit, and it represents how much each sale contributes to covering your fixed costs. This is one of the first calculations any business owner should make.
Fixed costs vs variable costs — what is the difference?
Fixed costs are expenses that stay the same regardless of how many units you sell: rent, salaried employee payroll, insurance, software subscriptions. Variable costs scale directly with production or service delivery: raw materials, shipping, commission payments, contractor fees. Correctly classifying your costs between fixed and variable is essential for an accurate break-even calculation. A common mistake is treating a semi-variable cost — like a utility bill that has a base charge plus a usage charge — as entirely fixed.
How to read a break-even chart
The chart plots three lines. The blue revenue line starts at zero and rises at a slope equal to your selling price. The red total cost line starts at your fixed cost level and rises at a slope equal to your variable cost per unit. The grey dashed line marks your fixed cost baseline. The point where the revenue line crosses the total cost line is your break-even. Everything to the right of that crossover is your profit zone. The vertical dashed line marks the break-even unit threshold.
Break-even analysis for service businesses and freelancers
If you sell services rather than products, your "unit" is typically a billable hour or a project. Your fixed costs are your monthly operating expenses — software subscriptions, coworking space, insurance. Your variable cost per unit might be subcontractor fees or per-project tools. The break-even calculation tells you the minimum number of billable hours or projects you need to book each month before you start making a profit. This is a critical number for any freelancer setting rates or planning capacity.
Margin of safety
The margin of safety is the difference between your projected or actual sales volume and your break-even volume. It is expressed in units or as a percentage. A 20% margin of safety means you could lose 20% of your sales before you start losing money. A margin of safety below 10% is a warning sign — a small drop in demand could push you into unprofitability.
Frequently asked questions
What if my selling price is lower than my variable cost?
The tool will show an error — a business cannot break even if it costs more to produce each unit than the selling price. You need to either raise prices or reduce variable costs.
How do I handle multiple products with different margins?
Use a weighted average selling price and weighted average variable cost based on your expected sales mix. This gives a blended break-even point for the whole business.
Can I include taxes in my break-even analysis?
Enter your after-tax selling price and after-tax variable cost to get a post-tax break-even point. Or use pre-tax figures and treat the break-even as a pre-tax target.
What is the contribution margin ratio?
The contribution margin ratio is (Selling price - Variable cost) / Selling price, expressed as a percentage. It tells you what percentage of each dollar of revenue is available to cover fixed costs and generate profit. The tool shows this in the summary cards below the chart.
How accurate is the break-even calculation for service businesses?
The calculation is exact for the inputs you provide. The main challenge for service businesses is accurately estimating capacity utilisation — how many billable units (hours, projects) you can actually deliver per month.