Your break-even point is the number of sales you need each month to cover every cost, before you earn any profit. This calculator shows it in units and in revenue. Add your realistic sales forecast and it also shows your margin of safety and the price you would need to charge.
Break-Even Calculator
How many sales you need each month to cover your costs.
Break-even units per month
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Estimates only. Results update as you type. Nothing you enter leaves your browser.
How to use the break-even calculator
Split your costs into two groups. Fixed costs stay about the same whatever you sell: rent, base salaries, insurance, loan payments, software subscriptions, your bookkeeper. Variable costs rise with each sale: materials, packaging, shipping, payment processing fees, sales commissions, and hourly labor on a job.
Enter your monthly fixed costs, the price of one unit, and the variable cost of that unit. For a service business, a "unit" can be a job, a billable hour, or a monthly client. Use whatever you actually sell.
The break-even formula
Break-even units = Fixed costs ÷ Contribution margin
Break-even revenue = Break-even units × Price
The contribution margin is what each sale leaves after its own costs. That money goes first toward fixed costs, and only after they are covered does it become profit. To plan for a profit goal, add it to fixed costs: (Fixed costs + Target profit) ÷ Contribution margin.
Worked example
A small candle maker has $12,000 a month in fixed costs, sells candles for $50.00, and spends $20.00 per candle on wax, jars, labels, and card fees. Each candle contributes $30.00. Break-even is $12,000 ÷ $30.00 = 400 candles a month, or $20,000 in revenue. If the shop expects to sell 600, it earns about $6,000 a month, and sales could drop 33% before it starts losing money. That percentage is its margin of safety.
Four ways to lower your break-even point
- Raise prices. This is usually the fastest lever. A price increase goes straight to contribution margin, so even a small one can cut break-even volume noticeably.
- Cut variable cost per unit. Renegotiate with suppliers, buy in larger lots, or cut waste and rework.
- Trim fixed costs. Look for software you don't use, space you don't need, and contracts that renew automatically.
- Change your mix. Push the products or services with the highest contribution margin, not just the highest price.
Frequently asked questions
What is a good margin of safety?
It depends on how steady your sales are. Many owners want at least 20–30% so an off month doesn't put them in the red. Seasonal and project-based businesses usually need a bigger cushion.
Should I include my own salary in fixed costs?
Yes, if you pay yourself a regular salary or draw. Leaving it out makes break-even look easier than it is, and it hides whether the business can actually support you.
How do I calculate break-even for a service business?
Choose a unit you can count, such as a job, a billable hour, or a monthly retainer client. Price is what you charge for one of those. Variable cost is the labor, materials, and fees tied directly to delivering it.
What if I sell many different products?
Use an average price and average variable cost weighted by how much of each you sell. Or run the calculator in revenue terms: divide fixed costs by your overall contribution margin ratio.
More free small business calculators
See all thirteen on the small business calculators page.
These calculators give planning estimates, not tax, legal, or financial advice. Check important decisions with your accountant or lender.
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