Break-Even Calculator
How many sales a month you need before the business earns anything
Updated 2026-09-09
- Contribution per sale
- $15.00
- Break-even units / month
- 200
- Break-even revenue
- $5,000.00
- Sales needed per day
- 7
Fixed costs are rent, software, insurance, and wages that do not change with volume.
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Break-even is the most sobering number in small business and the most useful. It converts rent, software, insurance, and wages into a single figure: how many sales a month you need before you earn anything at all. Most owners find the daily version — sales needed per day — changes how they plan a week.
The formula
Break-even units = fixed costs ÷ (price − variable cost). The bracketed part is your contribution margin: the money each sale contributes toward the fixed costs.
With $3,000 of monthly fixed costs, a $25 average sale, and $10 of variable cost, each sale contributes $15, so you need 200 sales a month — around 7 a day. If the average sale rises to $30 with the same costs, break-even falls to 150 sales.
Sorting fixed from variable costs
Fixed costs stay the same whether you sell nothing or sell out. Variable costs occur only when a sale happens.
- Fixed: rent, insurance, salaried wages, software subscriptions, loan repayments, utilities baseline
- Variable: cost of goods, packaging, card processing, per-order shipping, hourly staffing tied to volume, sales commission
- Semi-variable: hourly staff you schedule by expected footfall — put the guaranteed hours in fixed and the flexible hours in variable
Three ways to lower your break-even
Only three levers exist, and they are not equally easy.
- Raise the average sale — bundles, add-ons, and a higher-priced tier move this fastest and cost nothing to try
- Cut variable cost — better supplier terms, cheaper packaging, lower effective card rate
- Cut fixed cost — the hardest and slowest, but the most permanent; audit subscriptions annually
Using break-even for real decisions
Hiring: divide the new person's fully loaded monthly cost by your contribution per sale to see how many extra sales they must generate or enable. Rent: run the same calculation before signing a bigger lease. New product line: check the units required at the new margin before committing to a first order.
Break-even is also the honest test of a discount. Cutting price cuts contribution, which raises the number of sales needed — often by more than the promotion delivers.
A caution about averages
The calculation assumes a stable average price and cost. If half your revenue comes from a high-margin service and half from low-margin goods, run each stream separately, or your blended figure will hide a line that is losing money.
Keep the numbers in a spreadsheet
Ready-made Excel and Google Sheets templates that pick up where this calculator stops. One-off purchase, instant download.
Simple Profit & Loss (P&L) Statement Spreadsheet
Log transactions; get a monthly and yearly P&L with margins.
12-Month Cash Flow Forecast & Business Budget Spreadsheet
Sales with growth, seasonality and collection timing, every expense, closing cash, low-cash alerts and variance.
Frequently asked questions
What is a break-even point?
The sales volume at which total revenue exactly covers total costs. Below it you are losing money; above it, each additional sale contributes profit.
Should my own wage be a fixed cost?
Yes, if you need to be paid. Leaving your salary out produces a flattering break-even that the business cannot actually sustain.
How do I calculate break-even for a service business?
Use your average job value as the price and the direct labour and materials for that job as the variable cost. The result is jobs per month rather than units.
How often should I recalculate it?
Whenever a fixed cost changes materially — a rent review, a new hire, a new subscription — and at least once a quarter otherwise.
Related reading
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