Break-even calculator
How much do you need to sell, in revenue or in units, to cover all your costs? Enter fixed and variable costs and get the break-even point, the margin of safety and the expected profit.
What the break-even point is
It is the level of revenue at which income covers all costs exactly: below it you make a loss, above it you make a profit.
- Fixed costs: they do not change with sales, such as rent, salaries, leases, utilities, accountant.
- Variable costs: they grow with sales, such as goods, raw materials, commissions, shipping.
- Contribution margin: what is left of each sale after variable costs, which goes to cover fixed costs.
The formulas
- Break-even revenue = fixed costs ÷ (1 − variable costs as % of revenue)
- Break-even units = fixed costs ÷ (price − unit variable cost)
- Margin of safety = (expected revenue − break-even revenue) ÷ expected revenue
Example: fixed costs of €12,000 per month and variable costs at 60% of revenue. Each €100 sold leaves €40, so break-even is 12,000 ÷ 0.40 = €30,000 per month.
Breaking even is not cash
Break-even looks at costs and revenue, not at when money arrives. If clients pay in 90 days and suppliers in 30, you can be profitable and still overdrawn. That is why you also need a cash-flow forecast.
Breaking even, but what about cash?
A business can be profitable and still run out of cash if clients pay late. CassaChiara reads Italian e-invoices and shows a 90-day cash forecast, with payments due in and out.
Try it free with your invoices See pricingFrequently asked questions
How is the break-even point calculated?
Divide fixed costs by the contribution margin as a percentage. With €12,000 of fixed costs and a 40% margin, break-even is €30,000 of revenue.
What is the margin of safety?
How far expected revenue can fall before you make a loss, as a percentage. The higher it is, the sturdier the business.
Should break-even be calculated with or without VAT?
Without VAT: revenue and costs are always taken net of VAT.
Is the data I enter sent anywhere?
No: the calculation runs in your browser.