What this tool measures
The question this page answers
How many units, jobs, or orders you must sell at your current price to cover your fixed costs.
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.
Formula
Exactly how the result is calculated
- Contribution margin per unit
- price per unit − variable cost per unit
- Break-even units
- monthly fixed costs ÷ contribution margin per unit
- Returns 'Not available' when contribution margin is zero or negative, because no volume can reach break-even.
- Break-even revenue
- break-even units × price per unit
- Contribution margin rate
- contribution margin ÷ price per unit × 100
All outputs are direct arithmetic on the three numbers you enter.
Scope
What is counted, and what is not
Included
- All monthly fixed costs.
- All costs that vary directly with each sale.
Excluded
- Any profit. Break-even is the point where you have earned nothing.
- Taxes, loan principal, and owner draws.
- Timing — invoices raised are not cash received.
- Product mix. A business selling several things at different margins has a blended break-even this model cannot see.
Assumptions built into the model
- One clearly defined unit with one price and one variable cost.
- Fixed costs stay fixed across the volume range you are considering — true until you need another van, another oven, or another member of staff.
- Every unit sells at full price, with no discounting, refunds, or write-offs.
Worked scenario
Worked scenario: a mobile dog-grooming van
One van, one groomer. Fixed costs are $6,800 a month: van finance, insurance, licensing, phone, booking software, and the owner's modest salary. A standard groom is $95, and shampoo, consumables, fuel and card fees come to about $34 per appointment.
Inputs used
- Monthly fixed costs
- $6,800
- Price per unit
- $95
- Variable cost per unit
- $34
What the calculator returns
- Contribution margin per unit
- $61
- Break-even units
- 111.5 grooms
- Break-even revenue
- $10,590
- Contribution margin rate
- 64.2%
111.5 grooms a month sounds abstract. Over twenty working days it is about 5.6 appointments a day, every day, before the business earns a cent of profit.
That is the moment the number becomes useful, because now it is a scheduling question rather than a financial one. Can one groomer complete five or six appointments a day including driving between them? If not, the business cannot break even at $95 no matter how good the marketing is.
Raising the price to $110 drops break-even to 89.5 grooms — about 4.5 a day. A $15 price change removes more than a full appointment per day from what the schedule has to absorb. That is usually a more achievable route than finding 22 more customers a month.
Illustrative arithmetic only. These figures are chosen to show how the calculation behaves; they are not a case study, a client result, or a claim about typical performance.
Reading the result
How to interpret your primary result
- Convert break-even units into units per working day. That is the form in which you can judge whether it is possible.
- Compare it with your actual delivery capacity, not with your ambition. Break-even above capacity is a pricing or cost problem, never a sales problem.
- Watch the contribution margin rate: it tells you how much of each additional sale is available to cover fixed costs, and therefore how quickly profit arrives once you pass break-even.
Accuracy
What can make this result misleading
- Putting costs in the wrong bucket. Classifying a variable cost as fixed inflates break-even; the reverse hides it.
- Leaving your own pay out of fixed costs. A business that only breaks even because the owner works free is not at break-even.
- Using list price when you routinely discount. Enter the price you actually receive.
- Applying it to a mixed product range. Run each line separately, or use a weighted average price and cost.
When the answer is bad
What to do if the result is unfavourable
- 1 If contribution margin is zero or negative, stop and fix that first. No volume solves it — every additional sale increases the loss.
- 2 Test a price increase in the calculator before testing a cost reduction. Price usually moves break-even faster, because it raises contribution margin without touching operations.
- 3 Look for fixed costs that are only fixed by habit — subscriptions, unused space, retained services.
- 4 Consider whether a higher-value version of the same offer would sell to some customers. Raising average price on a portion of the base has the same effect as raising it on all of it, at less risk.
- 5 If break-even exceeds capacity and neither price nor cost can move enough, the model itself needs to change. That is a real finding, and better learned from a calculator than from a year of trading.
Pitfalls
Common mistakes with this calculation
- Treating break-even as a goal rather than as a floor.
- Forgetting that break-even rises the moment you add fixed costs — a hire, a lease, a subscription.
- Ignoring capacity, and so setting a sales target the business physically cannot fulfil.
- Discounting to hit volume, which lowers contribution margin and raises the break-even you were chasing.
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.
Before you rely on this estimate
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.
This tool's limitations, the situations where professional advice is the right call, and every formula and planning assumption behind it are documented on the methodology page.
If something here looks wrong — including a planning assumption you disagree with — please tell us. Corrections are made on the page and logged with a date on the updates page.