Plain-English explanation
What this tool helps you decide
Break-even is the point where sales cover your fixed costs and direct costs, before profit. It helps you understand whether a price, offer, or sales goal is realistic.
Use this calculator for products, services, packages, memberships, or jobs. The key is to define one unit clearly and use the price and variable cost for that unit.
Example
Example break-even calculation
A business has $12,000 in monthly fixed costs, charges $250 per job, and has $90 in variable cost per job.
Result: Contribution margin is $160 per job. The business needs 75 jobs, or $18,750 in revenue, to break even for the month.
What to do next
Turn the estimate into a practical next step
- 1 Separate fixed costs from costs that rise with each sale.
- 2 Use average price and average variable cost when products or jobs vary.
- 3 Compare break-even units with your realistic sales capacity.
- 4 Test how price increases or cost reductions change the break-even point.
- 5 Set a profit target above break-even so the business is not merely covering costs.
FAQ
Common questions
What counts as a fixed cost?
Fixed costs are expenses that stay relatively steady even when sales volume changes, such as rent, base payroll, insurance, subscriptions, and utilities.
What if contribution margin is zero or negative?
If price is equal to or below variable cost, the business cannot break even on volume alone. You would need to raise price, reduce direct costs, change the offer, or review the model.
Can I use this for services?
Yes. Treat one job, appointment, retainer, package, or customer as the unit. Include direct labor and materials as variable costs when they rise with each sale.
Is break-even the same as profit goal?
No. Break-even covers costs. Profit goals require additional contribution margin beyond break-even.
Educational disclaimer
This tool is for general educational planning only. It is not tax, legal, accounting, investment, or financial advice. Review important business decisions with qualified professionals who understand your company and location.