Break-Even Formula Explained, With Examples
Every break-even result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
Units = fixed costs ÷ (price − variable cost).
What each input means
- Fixed costs (S$): the value you enter in the calculator.
- Price per unit (S$): the value you enter in the calculator.
- Variable cost per unit (S$): the value you enter in the calculator.
Example
For example, with these inputs:
- Fixed costs (S$): 20,000
- Price per unit (S$): 25
- Variable cost per unit (S$): 10
the calculator returns:
- Break-even units: 1,333.33 units
- Break-even revenue: S$33,333.33
How the result changes
The table keeps the other inputs at their example values and changes fixed costs (s$).
| Fixed costs (S$) | Break-even units | Break-even revenue |
|---|---|---|
| 20,000 | 1,333.33 units | S$33,333.33 |
| 10,000 | 666.67 units | S$16,666.67 |
| 15,000 | 1,000.00 units | S$25,000.00 |
| 25,000 | 1,666.67 units | S$41,666.67 |
| 30,000 | 2,000.00 units | S$50,000.00 |
Why it matters
Interest rates, instalments and returns compound over years, so a small difference in rate or tenure turns into thousands of dollars. Working the numbers out yourself makes it easier to compare bank offers, avoid expensive debt and plan savings goals.
An emergency fund of three to six months of essential expenses protects you from having to borrow at high rates when something unexpected happens. Once that buffer is in place, extra savings can go towards longer-term goals and investments.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
Inflation erodes buying power, so a savings goal set in today's dollars needs to be adjusted upwards for the years it will take to reach it. Singapore's core inflation has varied widely over the past decade, so it is worth testing a range of rates.
Related calculations
- Emergency Fund Calculator: Sets a target for your rainy-day savings.
- Net Worth Calculator: Adds up what you own minus what you owe.
- Debt-to-Income Ratio Calculator: Shows what share of income goes to debt.
- Rule of 72 Calculator: Estimates how long money takes to double.
Use the Break-Even Calculator to plug in your own numbers.
Run your own numbers: Break-Even Calculator