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Break-Even Point
Calculator
Find out exactly how many sales you need each month to cover your costs — and how far you are from profitability right now.
Why calculate your break-even point?
Most business owners know their revenue goal but have no idea what their break-even point is. Without it, you're flying blind — you don't know if a slow month is survivable, whether your pricing is sustainable, or how much cushion you have before the business starts losing money.
Break-even analysis is one of the most important financial decisions you can make. It drives your pricing strategy, your hiring timeline, your marketing spend — everything. And it takes less than 2 minutes with this calculator.
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What is a break-even point and how do you calculate it?
What is the break-even point?
The break-even point is the exact number of units sold or revenue earned where total income equals total costs — zero profit, zero loss. Every sale above break-even generates profit. Every sale below it means you're losing money. Knowing your break-even point is the foundation of every pricing and sales decision.
How do you calculate break-even?
Break-even units = Fixed Costs ÷ (Price per Unit − Variable Cost per Unit). The denominator is called the contribution margin — the amount each sale contributes toward covering fixed costs. Once fixed costs are covered, every additional unit sold generates profit equal to the contribution margin.
What is the margin of safety?
The margin of safety is how far your current sales are above the break-even point, expressed as a percentage. A 30% margin of safety means sales could drop 30% before you start losing money. A low margin of safety is a warning sign — it means your business has little room to absorb a slow month or unexpected expense.
What is contribution margin?
Contribution margin is the revenue left after variable costs are subtracted — what each sale "contributes" toward fixed costs and profit. If you charge $200 per service and it costs $80 to deliver, your contribution margin is $120. You need enough of these $120 contributions to cover all your fixed costs before you're profitable.
How can I lower my break-even point?
Three ways: raise prices (increases contribution margin), reduce variable costs (same effect), or cut fixed costs (directly lowers the threshold). Most businesses focus on growing sales when lowering break-even is often faster and more sustainable. A bookkeeper can help you identify which fixed costs can be reduced without affecting operations.
How does break-even analysis help with pricing?
If your break-even analysis shows you need 100 sales per month but you're only capable of 60, your price is too low or your costs are too high. Break-even analysis forces you to connect your pricing to your cost structure — not just what the market will bear. It's how you build a business that's actually profitable, not just busy.