Break-Even Calculator

How to calculate break-even point — step by step

1. List your fixed costs — everything that stays the same regardless of how much you sell (rent, salaries, subscriptions, insurance).
2. Identify variable cost per unit — costs that scale with output (materials, delivery, payment fees).
3. Set your selling price.
4. Calculate contribution margin: Selling Price − Variable Cost.
5. Divide: Fixed Costs ÷ Contribution Margin = Break-Even Units.
6. Multiply by selling price to get Break-Even Revenue.

Example 1 — product business

A candle maker has £3,000/month in fixed costs, sells candles at £15 each, and materials cost £5 per candle:

• Contribution Margin = £15 − £5 = £10
• Break-Even Units = £3,000 ÷ £10 = 300 candles/month
• Break-Even Revenue = 300 × £15 = £4,500/month

Example 2 — service / SaaS business

A SaaS app has £15,000/month in fixed costs, charges £49/month per user, and has £4 in variable cost per user (hosting, support):

• Contribution Margin = £49 − £4 = £45
• Break-Even Users = £15,000 ÷ £45 = 334 users
• Break-Even Revenue = 334 × £49 = £16,366/month

What is a good break-even point?

There's no universal answer. What matters is whether you can realistically reach your break-even point given your market size and sales capacity. If it takes 3 years to break even, you need funding or a different cost structure.

Frequently asked questions

What is the break-even point?
The level of sales where revenue exactly covers all costs — no profit, no loss. Beyond this point every additional unit sold generates pure profit.

How does pricing affect break-even?
Increasing price directly increases the contribution margin, which reduces the units needed to break even. A 10% price increase on a low-margin product can cut your break-even point dramatically.

Can I calculate break-even for a whole business vs a single product?
Yes to both. For a whole business, use total fixed costs and a weighted average contribution margin across all products or services.