Work out your break-even point: the sales you need to cover all your costs, and how a price change moves it.
Updated October 2026Built and checked by MaverickHow it's calculatedReport an error
Break-even units
250
$25,000 revenue
Target units
417
$41,700 for target profit
Contribution margin
$60
60.0% per sale
Current profit
-$3,000
-25.0% margin of safety
At the break-even point, every dollar of revenue is paying off variable costs first, then fixed costs. Profit only starts beyond this point.
Higher prices need fewer sales to break even. Use this to decide whether to discount for volume or hold price and protect margin.
Below 100% = loss. Above 100% = profit. At 200% of break-even, profit equals your fixed costs.
The break-even point is where your revenue exactly equals your total costs: no profit, no loss. It's the minimum you need to sell just to keep the lights on. Every unit sold above break-even is profit; every unit below is a loss. This analysis is essential before launching a new product, setting prices, or deciding whether a business idea is viable. It also helps existing businesses understand the impact of cost changes or price adjustments.
Monthly fixed costs: $20,000 (rent, staff, utilities). Average coffee price: $5.50. Variable cost per coffee: $1.80.
Contribution margin: $3.70 per coffee (67.3%). Break-even: $20,000 ÷ $3.70 = 5,406 coffees a month, about 180 a day over 30 days, or $29,733 in sales. At 250 coffees a day (7,500 a month), profit = 7,500 × $3.70 − $20,000 = $7,750 a month, with a 27.9% margin of safety.
Fixed costs: $8,000/month. Average order value: $65. Variable cost (product + shipping): $32. Currently 350 orders a month, aiming for $10,000 profit.
Contribution margin: $33 an order. Break-even: 243 orders a month (about 8 a day). At 350 orders, profit = 350 × $33 − $8,000 = $3,550 a month. To make $10,000 a month, the store needs 546 orders ($35,490 in sales).