Break-even calculator

Find how many sales you need each month to cover your fixed costs, and what it takes to hit a profit target.

What you enter

  • Fixed costs per month – Rent, salaries, insurance, software and other costs that do not change with sales volume.
  • Selling price per unit (ex GST) – What you charge for one product, job or hour, excluding GST.
  • Variable cost per unit – Materials, merchant fees, freight, commissions and anything else that is spent for each extra sale.
  • Target monthly profit (optional) – Leave blank to see break-even only.

How it is calculated

Contribution margin = Price − Variable cost per unit. Break-even units = Fixed costs ÷ Contribution margin. Break-even revenue = Fixed costs ÷ (Contribution margin ÷ Price). Units for a target profit = (Fixed costs + Target profit) ÷ Contribution margin.

Assumptions

  • Price and variable cost per unit stay the same at every sales volume.
  • Fixed costs are fixed within the range you are modelling.
  • All amounts exclude GST, because GST you collect belongs to the ATO.
  • If you sell several products, use a weighted average price and variable cost.

Limitations

  • Break-even is about profit, not cash: customers who pay late can still leave you short of cash.
  • It ignores income tax and loan principal repayments.
  • Fixed costs step up as you grow (another vehicle, another employee); re-run it when that happens.

Related articles

  • Understanding profitability – Revenue is not profit. The difference between gross, operating and net profit, how margins and break-even work, why profitable businesses still run out of cash, and the levers that lift profit.
  • Pricing and profit margins – The difference between markup and margin, three ways to set prices, how break-even works, and why a small price increase does more for profit than a large increase in sales.
  • Budgeting and forecasting – How to build an annual budget you will actually use, keep a rolling forecast that reflects what is really happening, and use the gap between the two to make better decisions each month.