Returns and scenarios Updated November 2026

Break-even point

Break-even is the sales level where profit is zero. Break-even units = fixed costs / (price - variable cost per unit); break-even revenue = fixed costs / contribution margin ratio. Above it every extra unit adds its contribution margin straight to profit.

Syntax

BE units = Fixed costs / (Price - Variable cost per unit);  BE revenue = Fixed costs / CM ratio

Part	What it is
`Fixed costs`	Costs that do not change with volume in the period (rent, salaries)
`Price`	Selling price per unit
`Variable cost per unit`	Direct cost per unit sold
`CM ratio`	(Price - variable cost) / price

Examples

Fixed 1,000, price 10, variable cost 6
=1000 / (10 - 6)

Result: 250 units

Break-even revenue with a 40% contribution margin ratio
=1000 / 40%

Result: 2,500

Margin of safety at 400 units sold
=(400 - 250) / 400

Result: 37.5%

Common mistakes

Using total variable costs instead of variable cost per unit in the denominator.
Dividing by price alone, which ignores the variable cost and understates break-even.
Treating semi-variable costs as fixed; split them, or break-even shifts as volume changes.

Practice Break-even point

These drills check your answer on live data, free, no account needed.

Break-even by productFor each product line, fill the contribution margin per unit (column E), the break-even units rounded up to a whole unit with ROUNDUP (column F) and the break-even revenue (column G).
Profit grid by price and volumeFill the grid B6:F9 with operating profit for every combination of price (column A) and units (row 5): (price less variable cost) times units, less fixed costs. One formula, filled right and down.
Fixed and variable operating costsOperating expenses have a fixed part that rises with inflation and a variable part tied to revenue. Fill row 9: fixed costs grown by inflation for the number of years in row 7, plus the variable share of revenue.

Questions

How do I find break-even in Excel?

Put fixed costs, price and unit cost in cells and use =fixed/(price-unit_cost). For a full model, use Goal Seek: set the profit cell to 0 by changing the volume cell.

What is the break-even for several products?

Use the weighted average contribution margin per unit across the sales mix, or compute break-even revenue with the blended CM ratio.

Operating leverageDegree of operating leverage = contribution margin / EBIT = % change in EBIT / % change in sales. An example where a 10% sales rise lifts EBIT 40%, and why.
Gross marginGross margin = (revenue - COGS) / revenue. The formula, worked examples with exact percentages, the difference between margin and markup and common mistakes.
Sensitivity tableHow to build a sensitivity table with Data, What-If Analysis, Data Table: layout, row and column input cells, exact NPV examples and fixing wrong results.
COGS as a percent of revenueCOGS % = cost of goods sold / revenue, and forecast COGS = revenue x COGS %. How to compute the historical ratio, project it and link it to gross margin.