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How to Calculate Your Break-Even Point
Break-even is the most clarifying number in a small business: the exact sales level where you stop losing money. Below it, every day costs you; above it, every sale contributes profit. This guide shows the formula, a complete worked example, and the calculator that answers it in seconds.
Step by step
- Open the Break-Even Calculator.
- Enter your total monthly fixed costs (rent, salaries, insurance, software — everything you pay even with zero sales).
- Enter the selling price per unit and the variable cost per unit (materials, per-sale fees, piece labor).
- Read your break-even in units per month and in revenue — sell more than that and you are in profit.
Try it now — free, no sign-up
Open the Break-Even Calculator tool
Open the Break-Even Calculator tool
Tips for better results
- Contribution margin (price − variable cost) is the engine: raising price or cutting variable cost lowers break-even fast.
- Run break-even per product, not just for the whole business — one product often subsidizes another without anyone noticing.
- Revisit quarterly: fixed costs creep up silently, and last year's break-even is this year's loss-maker.
Frequently asked questions
What is the break-even formula?
Units = Fixed costs ÷ (Price − Variable cost per unit). Example: $5,000 fixed, price $200, variable $50 → 5,000 ÷ 150 = 34 units (rounded up).
What counts as a fixed cost?
Costs that do not change with sales volume: rent, base salaries, insurance, subscriptions, loan payments.
What if I sell services, not units?
Treat one billable hour (or one job) as the 'unit': price per hour minus the variable cost of delivering that hour.