Break-Even Calculator

Last updated July 2, 2026

The break-even point is the revenue level at which a business covers all costs and produces neither profit nor loss — the floor below which the business loses money and above which it begins to generate returns. The calculation requires two types of costs: fixed costs that don't change with volume (rent, salaries, insurance, software subscriptions) and variable costs that rise proportionally with output (materials, direct labor per unit, payment processing fees). Contribution margin is the per-unit selling price minus variable cost per unit — the amount each sale contributes toward covering fixed costs. Divide total fixed costs by the contribution margin per unit to get the break-even unit volume.

For a business with $8,000 per month in fixed costs selling a service at $200 per engagement with $50 in direct variable costs, the contribution margin is $150 per engagement. The break-even point is $8,000 divided by $150 — 54 engagements per month. Below 54, the business loses money regardless of revenue. Above 54, each additional engagement generates $150 in pure contribution to profit. For businesses with multiple products or service lines, the blended contribution margin across the mix drives the calculation. The break-even calculation is most useful as a planning tool: before launching a business, expanding to a new product line, or adding a fixed cost like a new hire, modeling how the break-even point shifts tells you how much risk the change introduces.

The calculation shows your break-even point before committing to any new fixed cost — a lease, a hire, a significant equipment purchase. The result also shows how many additional units or clients are needed to cover the new obligation. If the additional volume required exceeds what you can reasonably expect to generate, the fixed cost commitment may not be supportable.