Free tool · Money & pricing
Break-even calculator
Your break-even point is the number of sales where revenue exactly covers costs. Enter monthly fixed costs, your price and the variable cost of each sale to find it — plus how many months it takes to recover what you spent to launch.
Break-even point
80 units
≈ $6,400 in monthly sales.
- Contribution margin / unit
- $50.00
- Contribution margin ratio
- 62.5%
- Break-even revenue
- $6,400
- Profit at expected sales
- $2,000
- Months to recover startup costs
- 5
Formulas
- Contribution margin = Price − Variable cost per unit
- Break-even units = Fixed costs ÷ Contribution margin
- Break-even revenue = Break-even units × Price
Fixed vs variable costs
Fixed costs stay the same whether you sell one unit or a thousand: rent, insurance, software subscriptions, loan payments and the salary you pay yourself.
Variable costs rise with every sale: materials, packaging, shipping, payment processing, commissions and hourly labor for that job. Getting this split right is most of the work — misclassifying a big cost will move your break-even point a lot.
Worked example: a mobile detailing business
Fixed costs are $2,400 a month (van payment, insurance, phone, booking software, a $1,500 owner draw). Each detail sells for $180 and uses $25 of products and $15 of fuel, so the contribution margin is $140.
Break-even = $2,400 ÷ $140 = 17.1, so 18 details a month. At 30 details a month the business makes $1,800 profit, and $9,000 of startup equipment is paid back in five months.
How to lower your break-even point
- Raise prices — every dollar goes straight to contribution margin.
- Cut variable costs per unit by buying supplies in bulk or reducing waste.
- Keep fixed costs flexible early on: rent by the month, use free tiers, work from home.
- Add a higher-margin upsell so the average sale is worth more.
Frequently asked questions
How do I calculate my break-even point?
Divide total monthly fixed costs by your contribution margin per unit (price minus variable cost per unit). The result is the number of units you need to sell each month to cover costs.
What is a contribution margin?
It is the part of each sale left over after variable costs, which goes toward paying fixed costs and then profit. A $50 sale with $20 of variable costs has a $30 contribution margin.
How long does it take a small business to break even?
It varies with startup costs and how quickly sales ramp up. Low-cost service businesses can cover costs within a few months, while businesses with leases, build-outs or inventory often take a year or more.
Should my salary be included in fixed costs?
Yes, if you want an honest break-even. Leaving it out tells you when the business stops losing money, not when it pays you.