Break-even Formula for Small Business Owners
Break-even shows how many sales you need before the business starts making profit. It is useful for product launches, services, campaigns and ecommerce offers.
Break-even formula
Break-even units = Fixed costs / Contribution margin per unit
Contribution margin per unit means selling price minus variable cost per unit.
Example
If fixed cost is $1,000 and each sale contributes $20 after variable cost, you need 50 sales to break even.
Costs to include
- Rent or software subscriptions
- Staff or founder salary target
- Product cost
- Delivery or packaging
- Payment fees
- Marketing cost
Use the calculator
Use the Break-even Calculator and explore more Business Calculators.