Chartered Financial Analyst specializing in capital budgeting and project finance viability analysis.
Determine how many units or services your project must sell to cover its total initial investment. Enter any three variables—Total Fixed Project Cost, Price per Unit, Variable Cost per Unit, or Breakeven Units—to solve for the fourth.
Project Breakeven Calculator
Project Breakeven Formula
The breakeven formula for a project finds the number of units (Q) it must sell for its total revenue to equal the total fixed investment and all variable costs.
Q = F / (P – V)
Solve for Total Fixed Project Cost (F):
F = Q * (P – V)
Solve for Price per Unit (P):
P = (F / Q) + V
Solve for Variable Cost per Unit (V):
V = P – (F / Q)
Variables Explained
- Total Fixed Project Cost (F): The total, one-time fixed investment required to launch the project (e.g., R&D, new equipment, development).
- Price per Unit/Service (P): The revenue generated from one sale of the project’s output.
- Variable Cost per Unit (V): The direct cost associated with producing one unit of the project’s output (e.g., materials, labor).
- Breakeven Units Sold (Q): The total number of units that must be sold to pay back the fixed cost (F).
Related Calculators
- Software Breakeven Calculator
- Startup Breakeven Calculator
- Investment ROI Calculator
- Net Present Value (NPV) Calculator
What is a Project Breakeven Point?
A **Project Breakeven Point** is a crucial metric in capital budgeting. It determines the minimum number of units a new project must sell, or the minimum amount of service it must provide, to cover its initial, fixed investment. In short, it is the point at which the project has paid for itself and begins to generate a positive return.
**Fixed Costs (F)** in this context are not monthly overhead, but rather the total *upfront investment*. This includes all costs to get the project operational, such as research and development (R&D), purchasing new machinery, software development, or initial marketing launch costs.
**Variable Costs (V)** are the direct, per-unit costs of production. This includes raw materials, direct labor, and any other cost that is incurred only when a unit is produced and sold.
The **Contribution Margin** (P – V) is the profit from selling one unit. This calculator finds how many units, each contributing this margin, are needed to fully pay back the total fixed project cost (F). Any sales beyond this breakeven point (Q) represent profit on the project.
How to Calculate Project Breakeven (Example)
Let’s calculate the breakeven point for a new capital project.
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Identify Total Fixed Project Cost (F):
A company invests in a new 3D printer for $10,000 to sell custom prototypes.
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Identify Price per Unit (P):
The company will sell each custom prototype for $100.00.
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Identify Variable Cost (V):
The raw materials, electricity, and labor for each prototype cost $20.00.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per unit: $100.00 (P) – $20.00 (V) = $80.00.
Next, divide the fixed project cost by this margin:
Q = $10,000 / $80.00 = 125 -
Conclusion:
The company must sell 125 prototypes to pay off the 3D printer’s cost and breakeven on the project.
Frequently Asked Questions (FAQ)
A standard breakeven calculator often uses *monthly* fixed costs (like rent) to find the breakeven units *per month*. This project calculator uses the *total* fixed investment to find the *total* units needed to be sold over the project’s life to pay back that investment.
This is a simple breakeven analysis and does *not* account for the time value of money (e.g., discounting cash flows). For a more advanced analysis that includes time and discount rates, you should use a Net Present Value (NPV) calculator.
This should be every single cost that is *not* dependent on the number of units sold. This includes the cost of the asset (machinery, software), R&D, setup and installation, and any initial marketing budget to launch the project.
This is an excellent use case. Estimate your total investment (F) (e.g., $10,000) and your variable cost (V) (e.g., $20). Then, set a realistic sales goal (Q) (e.g., 100 units). Solve for (P) to find your minimum price: `P = ($10,000 / 100) + $20 = $100 + $20 = $120`. This means you must charge at least $120 per unit to breakeven within 100 units.