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Break-even calculator

Enter your fixed costs for a month, your average price and the direct cost of each sale. See how many sales you need before you start to make a profit.

Published

$

Rent, software, insurance, phone and your own pay: costs that stay the same however much you sell.

$
$

Materials, card fees, shipping and contractor time for one sale.

Sales you need each month

0

to break even

Revenue at break-even

$0

Each month

Each sale adds

$0

0% of the price

What is break-even?

Your break-even point is the amount you must sell to cover all your costs, with nothing left over and nothing lost. Every sale after that is profit. Knowing it tells you if a price, a new hire or a bigger office makes sense.

The formula

Each sale earns its price minus its direct cost. This is called the contribution margin, because it is what the sale contributes toward your fixed costs.

  • Break-even sales = fixed costs ÷ (price − direct cost of a sale)
  • Break-even revenue = fixed costs ÷ contribution margin ratio

An example

A dog groomer has $4,000 of fixed costs a month. A groom is $150, and shampoo, supplies and card fees cost $60. Each groom adds $90, so the groomer needs 45 grooms a month, $6,750 of revenue, to break even. The 46th groom is the first profit.

Three ways to lower it

  1. Raise prices. Each sale then covers more of the fixed costs.
  2. Lower the direct cost of a sale. Better supplier prices or lower fees.
  3. Cut fixed costs. Cancel subscriptions you do not use.

Use your real numbers

Take your fixed costs from last month's expenses and your average price from your sales. Righto, the free accounting app for Mac, gives you both from your bank statements.

Frequently asked questions

What is a break-even point?

The level of sales where income equals costs, so the profit is zero. Sell more and you make a profit; sell less and you lose money.

What are fixed costs?

Costs that stay the same whatever you sell in the month: rent, insurance, software, loan payments and a set salary for yourself.

What are variable costs?

Costs that go up with each sale: materials, goods for resale, card processing fees, shipping and commission.

Should I include my own pay?

Yes, if you want the break-even point to show when the business really pays its way. Add the amount you need to take home to the fixed costs.

What if I sell different things at different prices?

Use your average sale: total sales in a month divided by the number of sales, and the same for direct costs.

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