Business Break-Even Calculator

Business break-even analysis determines the exact point where your cumulative revenue covers all startup and ongoing costs — the moment you stop losing money and start making it.

Core formulas: Monthly Net Profit = Revenue − Fixed Costs − Variable Costs Break-Even Point (months) = Total Startup Costs ÷ Monthly Net Profit Break-Even Revenue (units) = Fixed Costs ÷ (Price per Unit − Variable Cost per Unit)

Where:

• Startup costs = one-time launch expenses (equipment, licenses, deposits, inventory, website)
• Fixed costs = recurring costs that don’t change with sales (rent, salaries, insurance, subscriptions)
• Variable costs = costs that scale with revenue (raw materials, shipping, sales commissions, payment fees)
• Revenue = total income from sales per month

Contribution margin: Contribution Margin = Price per Unit − Variable Cost per Unit This is how much each sale contributes toward covering fixed costs and eventually generating profit.

Worked example: A bakery launches with:

• Startup costs: $40,000
• Monthly fixed costs: $6,000 (rent $2,500, staff $2,800, utilities/insurance $700)
• Monthly revenue: $14,000
• Monthly variable costs: $4,200 (ingredients, packaging — 30% of revenue)

Monthly Net Profit = $14,000 − $6,000 − $4,200 = $3,800 Break-Even = $40,000 ÷ $3,800 = ~10.5 months

Per-unit break-even (selling $5 muffins, $1.50 variable cost): Contribution Margin = $5.00 − $1.50 = $3.50 Break-Even Units = $6,000 ÷ $3.50 = ~1,714 muffins/month

Industry benchmarks: Most small businesses break even within 18–24 months. Restaurants typically take 2–3 years. Software businesses with low variable costs can break even in under 12 months. Knowing your break-even point is essential before seeking investment or taking on debt.