Chartered Financial Analyst specializing in manufacturing and food/beverage industry finance.
Find out how many units (e.g., kegs or pints) your brewery needs to sell per month to cover all costs. Enter any three variables—Monthly Fixed Costs, Avg. Price per Unit, Avg. Variable Cost per Unit, or Breakeven Units—to solve for the fourth.
Brewery Breakeven Calculator
Brewery Breakeven Formula
The breakeven formula for a brewery finds the number of units (kegs, cases, pints) (Q) it must sell for total monthly revenue to equal all fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Price per Unit (P):
P = (F / Q) + V
Solve for Avg. Variable Cost per Unit (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total, recurring monthly overhead (e.g., building rent, equipment leases for tanks/fermenters, salaries, insurance, utilities).
- Avg. Price per Unit (P): The average amount you sell one unit for. This unit could be a pint, a 4-pack, a case, or a keg.
- Avg. Variable Cost per Unit (V): The average cost of ingredients (hops, malt, yeast), packaging (keg, can, bottle), and direct labor for *one unit*.
- Breakeven Units (Q): The total number of units you need to sell to reach $0 in monthly profit.
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What is a Brewery’s Breakeven Point?
A **Brewery Breakeven Point** is the number of units (e.g., kegs) (Q) your operation must sell in a month to cover all your total expenses. This is the minimum production and sales volume you need to achieve to start being profitable.
**Fixed Costs (F)** are your monthly “overhead.” These are the expenses you pay regardless of how much beer you brew. This includes your building rent, loan payments on brewing tanks and fermenters, utilities (water, electric), salaries for full-time brewers and staff, and insurance.
**Variable Costs (V)** are the costs tied *directly* to each unit you produce. This includes all raw ingredients (malt, hops, yeast, water), packaging (kegs, cans, bottles, labels), and any direct labor paid hourly for brewing and packaging that specific batch.
The **Contribution Margin** (P – V) is the profit from a single unit sold that goes toward paying off your large monthly fixed costs. This calculator finds how many units you need to sell to cover your total overhead. Every unit sold *after* this point generates your net profit.
How to Calculate Brewery Breakeven (Example)
Let’s calculate the breakeven point for a microbrewery that sells kegs to bars.
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Identify Monthly Fixed Costs (F):
The brewery has $15,000 in monthly rent, equipment payments, and salaries.
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Identify Avg. Price per Unit (P):
The average keg is sold to a distributor for $180.
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Identify Avg. Variable Cost (V):
The average cost of ingredients and the keg shell for one unit is $60.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per keg: $180 (P) – $60 (V) = $120.
Next, divide the fixed costs by this margin:
Q = $15,000 / $120 = 125 -
Conclusion:
The brewery must sell 125 kegs each month to cover all costs and start making a profit.
Frequently Asked Questions (FAQ)
You must be consistent. If your (F) is monthly, your (Q) will be the monthly units. If you sell in multiple formats (pints in a taproom and kegs to bars), it’s best to calculate an “average” price (P) and cost (V) for an “equivalent unit” (like per gallon or per barrel).
If you pay your head brewer a salary, that is a **Fixed Cost (F)**. If you pay hourly staff to help package a specific batch, their wages for that time are a **Variable Cost (V)**.
Brewing excise taxes are almost always paid *per gallon* or *per barrel* produced. Because they scale directly with production, they should be included in your **Variable Cost (V)**.
Enter your (F) (e.g., $15,000), (V) (e.g., $60), and your monthly production/sales goal (Q) (e.g., 150 kegs). Solve for (P): `P = ($15,000 / 150) + $60 = $100 + $60 = $160`. This means your average keg price must be at least $160 to break even at 150 kegs/month.