Break-even calculator
Break-even is fixed costs divided by contribution margin — the price of one unit minus what it costs to deliver that unit. It is the number of sales at which the month stops losing money.
Break-even, step by step
Contribution margin is the whole calculation, and it is per unit: price minus the variable cost of serving one more customer. If that margin is zero or negative, there is no break-even point at any volume, and selling more makes the loss larger. That outcome is worth checking for before anything else.
Fixed costs are the ones that do not move with volume — salaries, rent, tooling, the base infrastructure bill. Anything that scales with customers belongs in variable cost instead. Putting a cost on the wrong side of that line is the usual reason two people get different break-even numbers from the same accounts.
Where this number misleads you
Break-even assumes fixed costs stay fixed, and they rarely do across the range you are modelling. Tripling volume often means another support hire and a bigger infrastructure tier, which moves the target as you approach it. It also ignores timing entirely: a business that breaks even on paper can still run out of cash while waiting to be paid.
Questions people ask
How do I calculate the break-even point?
Divide total fixed costs by contribution margin per unit, where contribution margin is price minus variable cost per unit. The result is the number of units you must sell in the period to cover fixed costs. Multiply by price for break-even revenue.
What is the difference between fixed and variable costs?
Fixed costs do not change with how much you sell — salaries, rent, software licences, base infrastructure. Variable costs are incurred per additional customer or unit — payment fees, per-seat licences, usage-based hosting, support time. Misclassifying one changes the answer substantially.
What if my contribution margin is negative?
Then there is no break-even volume: every additional sale increases the loss, and growth makes things worse rather than better. Raise the price, cut the cost of serving a customer, or change the segment you sell to. No amount of scale fixes a negative unit margin.
When one number is not the job
This page works out one number. PikoPM’s Business model canvas puts the number in the argument around it, which is what an investor or a board actually reads.
Open Business model canvas — it needs an account, and the Free plan covers it.