Break-Even Calculator
How many sales to cover your costs each month
General information only — not financial, legal, tax or business advice. Estimates vary by your circumstances.
What is a break-even point?
Your break-even point is the level of sales where total revenue exactly covers total costs — you make no profit, but no loss either. Every sale beyond it contributes to profit. Knowing this number tells you whether your pricing and cost structure can actually work before you commit.
How break-even is calculated
The formula is simple:
- Contribution margin = price per sale − variable cost per sale
- Break-even units = fixed costs ÷ contribution margin
- Break-even revenue = break-even units × price
For example, if your fixed costs are $5,000 a month, you sell at $50 and each sale costs you $18, your contribution margin is $32. You need 157 sales a month ($5,000 ÷ $32) to break even.
Using break-even to make decisions
- Pricing: a small price rise lifts your margin and lowers the sales you need.
- Cost control: cutting fixed costs (cheaper premises, leaner staffing) drops the break-even point directly.
- Feasibility: if break-even sales look unrealistic for your market, the model needs rethinking before you spend money.
Frequently asked questions
What is the break-even formula?
Break-even units = fixed costs ÷ (price per sale − variable cost per sale). The bottom part is your contribution margin — the profit each sale adds before fixed costs.
What counts as a fixed vs variable cost?
Fixed costs stay the same regardless of sales (rent, salaries, insurance, software). Variable costs change with each sale (materials, ingredients, packaging, payment fees).
How do I lower my break-even point?
Raise your price, reduce the cost of each sale, or cut fixed costs. Even a small price increase can sharply reduce the number of sales you need.