Break-Even Calculator for Small Business

Find the monthly sales you need to cover rent, wages and other fixed costs before you make a profit.

Quick answer

A small business break-even point is fixed costs divided by the contribution per unit, which is price minus variable cost. With $8,500 of monthly fixed costs, a $45 price and $18 of variable cost per sale, each sale contributes $27, so you need 315 sales, or about $14,167 of revenue, a month to break even.

$
$
$
Break-even units
315
Break-even revenue
$14,167
Contribution per unit
$27.00
Contribution margin
60.00%
Each sale at $45.00 leaves $27.00 after variable costs to cover your $8,500 of fixed costs. You need to sell 315 units (about $14,167 in sales) to break even; every unit after that is profit.

Inputs are pre-filled with the example used on this page — change any number to see your own result. Built on our break-even calculator.

Key takeaways

  • Contribution margin — the share of each sale left after variable costs — determines how fast you reach break-even.
  • Raising price or cutting variable cost lowers the break-even point quickly.
  • Break-even is a floor; you also need to cover your own pay and taxes to be truly profitable.
Contribution margin — Price minus variable cost per unit, in dollars or as a percentage of price. It is what each sale contributes toward fixed costs.

Fixed vs variable costs

Fixed costs stay the same whatever you sell: rent, salaried wages, insurance, software subscriptions and loan payments. Variable costs rise with each sale: materials, packaging, payment processing fees, shipping and sales commissions. Getting this split right is the most important step, so go through a few months of bank statements.

What-if: price and cost changes

In the example, each $45 sale leaves $27 after $18 of variable costs — a 60% contribution margin. Raising the price to $50 increases the contribution to $32 and cuts break-even to 266 sales. Cutting variable cost to $15 instead gives a $30 contribution and 284 sales. Try your own changes above.

Using break-even to plan

Divide monthly break-even units by the days you are open to get a daily target. If that number is unrealistic, look at reducing fixed costs, increasing price, or focusing on higher-margin products. The SBA recommends estimating costs carefully when planning a business, and lenders often ask for this analysis.

Worked example

Contribution per unit = $45 − $18 = $27. Break-even units = $8,500 ÷ $27 = 314.8, rounded up to 315 sales a month. Break-even revenue = $8,500 ÷ 60% contribution margin = $14,166.67.

Methodology and sources

Break-even units = fixed costs ÷ (price − variable cost per unit), rounded up to whole units. Break-even revenue = fixed costs ÷ contribution margin ratio. It assumes a single average price and cost; for several products, use weighted averages.

Sources: Investopedia – Break-even analysis · U.S. SBA – Calculate your startup costs

Frequently asked questions

What costs count as fixed?

Costs that do not change with sales volume in the short term, such as rent, base salaries, insurance and subscriptions.

How do I handle several products?

Use a weighted average price and variable cost based on your expected sales mix.

Should I include my own salary?

Yes, if you want break-even to mean the business can pay you. Add it to fixed costs.

How often should I recalculate?

Whenever prices, suppliers or fixed costs change, and at least once a year.

Results are estimates for educational purposes and are not financial advice.

Written and reviewed by Muhammad Asif, founder of CalcPane · Formulas verified by automated tests · Updated