Financial
Break-Even Analysis
Determine how many units you need to sell (or how much revenue you need) to cover all costs. Essential for business planning and pricing decisions.
Excel Formula
=A2/(B2-C2)Step-by-Step Explanation
1
A2 is the total fixed costs
2
B2 is the selling price per unit
3
C2 is the variable cost per unit
4
(B2-C2) is the contribution margin per unit
5
Fixed costs divided by contribution margin gives break-even units
Example
| Fixed Costs (A) | Price/Unit (B) | Variable Cost/Unit (C) | Break-Even Units (D) |
|---|---|---|---|
| $50,000 | $25 | $10 | 3,334 |
| $100,000 | $80 | $35 | 2,223 |
Result: Formula in D2: =A2/(B2-C2) → 3,334 units
Common Variations
Break-even revenue
=A2/(1-C2/B2)Result in dollar amount
With target profit
=(A2+D2)/(B2-C2)D2 = desired profit
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