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Break-Even Analysis: Find the Sales You Need to Turn a Profit
By Eric Bonnette • Updated 10/31/2025
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Step 1: The formula
Break-even (units) = Fixed Costs ÷ (Price per unit – Variable cost per unit)
Step 2: Example — T-shirt business
Alex sells custom T-shirts for $25 each.
| Item | Amount |
|---|---|
| Fixed costs (rent, website, marketing) | $10,000 |
| Variable cost per shirt (fabric, ink, labor) | $10 |
| Price per shirt | $25 |
Break-even = $10,000 ÷ ($25 – $10) = 667 shirts
Alex needs to sell 667 shirts to pay all expenses. The 668th shirt is where profit begins.
Break-Even Calculator: Enter your fixed and variable costs to see the sales target where profit begins. Open Break-Even Calculator
Step 3: Use break-even for better decisions
- Test new pricing or discounts before launching.
- Forecast how much revenue a new location must bring in.
- Know when an equipment purchase will pay for itself.
Track costs and revenue easily in QuickBooks
Register your business legally with LegalZoom