Break-even calculator
Find how many sales you need each month to cover your costs, and how many more to reach the profit you want.
How it's calculated
Each sale earns a contribution: its price minus its variable cost. You break even when total contribution covers your fixed costs.
- Break-even units = fixed costs ÷ contribution per unit
- Break-even revenue = fixed costs ÷ contribution margin
- Units for a target profit = (fixed costs + target profit) ÷ contribution per unit
Worked example
Fixed costs are 20,000 a month, the average price is 50 and the variable cost is 30. Each sale contributes 20, so break-even is 1,000 units, or 50,000 of sales a month. To make 10,000 profit, you'd need 1,500 units. Selling 1,300 units gives a margin of safety of about 23%.
Use it to decide
- Test a price rise: a small change in price often moves break-even more than cutting costs
- Check a new hire or a bigger office before you commit
- Compare products: the one with the higher contribution pays your overheads faster
A planning tool, not financial advice.
Common questions
What counts as a fixed cost?
Anything you pay whether or not you sell: rent, salaries, software, insurance and loan interest. Costs that rise with each sale are variable.
What is the margin of safety?
How far your expected sales are above break-even, as a share of expected sales. It shows how much sales could fall before you make a loss.
Does this work for a service business?
Yes. Treat a job, client or billable hour as the unit, with its average price and the direct costs of delivering it.
Related
Step one is free
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Start with a free 20-minute Leak Check, online, wherever you are. Tell us where money feels tight and we'll show you where it's slipping away.
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