A practical guide

How to calculate break-even

Divide your monthly fixed costs by the contribution per sale (price minus the cost of one sale), then round up to a whole sale.

Published November 3, 2026 · Luke F. Walton

Break-even is the number of sales in a month where what you take in equals what you spend. Below it you lose money. Above it you keep the difference.

The formula is short. Take your monthly fixed costs and divide them by the contribution per sale, which is your price minus what one sale costs you. Round up to a whole sale. The SBA gives the same formula in its guide to calculating your startup costs, and defines contribution margin as the gap between a product’s price and what it costs to make. If you would rather type the numbers in than read first, the break-even calculator does this arithmetic for you.

What is the break-even formula?

Break-even in sales equals fixed costs divided by contribution, rounded up. Contribution is price minus variable cost.

Price is what one sale brings in. Variable cost is what one sale costs you to deliver: the part, the fuel, the fee. Contribution is what is left, and it goes toward the monthly bills. Fixed costs are the bills that arrive whether you sell anything or not.

Each sale pays for itself first. What is left chips away at the monthly bills. Break-even is the sale where the chipping is done.

A worked example: mobile bike repair

Say you repair bikes at people’s doors for $60 a visit. These numbers are an illustration, not typical figures for anyone.

Variable cost per visit: $18, for parts, fuel and the supplies you use up on a job.

Monthly fixed costs:

• Van payment: $450
• Van insurance: $160
• Storage unit for parts: $250
• Booking tool and phone: $90

Step by step:

1. Contribution = $60 price minus $18 variable cost = $42 per visit.
2. Fixed costs = $450 + $160 + $250 + $90 = $950 a month.
3. Break-even = $950 ÷ $42 = 22.62 visits.
4. Round up, because you cannot sell 0.62 of a visit: 23 visits a month.

Check it. At 22 visits, contribution is 22 × $42 = $924, which is $26 short of $950. At 23 visits it is 23 × $42 = $966, which clears the bills by $16. That is why the answer rounds up and never down.

Which costs are fixed and which are variable?

A cost is fixed if it stays the same when you sell one more thing, and variable if it rises with each sale. Rent, insurance, a loan payment, software subscriptions and salaries are the usual fixed costs. The SBA’s own examples of fixed costs include lease payments, salaries, insurance and interest.

Variable costs are the ones you pay again for every sale: materials, stock you resell, shipping, fuel for a trip, a helper paid by the job.

Some costs get put in the wrong column, and the wrong column changes your answer.

Your own pay is the first one. If you want a set amount to come out each month, put it in monthly bills, and break-even covers your pay too. Leave it out and break-even only tells you when the business stops losing money, with you working for nothing until then. If you pay yourself per job, it belongs in the cost of one sale instead.

A van payment is fixed, but the fuel, tires and oil that come from driving it are variable. Split them. Card processing fees are variable: they come out of each sale, usually as a share of the price, so they belong in what one sale costs you. Check a recent statement for your own rate rather than guessing.

When one cost is part flat and part per sale, put the flat part in monthly bills and the per-sale part in the cost of one sale.

Break-even in sales versus break-even in dollars

Break-even in dollars is the break-even in sales multiplied by your price. It is the revenue you need to bring in to cover the same bills.

In the bike example: 23 visits × $60 = $1,380 in revenue. Use the rounded-up number of sales, not the raw 22.62. Otherwise you would land at about $1,357, which is short of break-even by one partial sale that you cannot actually sell.

Dollars suit a shop that counts the till. Sales suit work you can picture: 23 visits is about one a working day. The calculator reports the sales number.

What if the number is higher than I can sell?

Change one of four things: the price, the cost of one sale, the monthly bills, or the offer itself. Try each against the same example, where 23 visits is too many.

• Raise the price. At $70, contribution is $52 and break-even is $950 ÷ $52 = 18.27, so 19 visits. A price rise lands entirely in contribution, so it works harder than it looks. The pricing calculator converts between price, markup and margin, and how to price a product or service covers how to choose.
• Cut the cost of one sale. If better buying and a tighter route take variable cost from $18 to $14, contribution is $46 and break-even is $950 ÷ $46 = 20.65, so 21 visits.
• Cut monthly bills. Drop the storage unit and keep parts at home. Fixed costs fall to $700, and $700 ÷ $42 = 16.67, so 17 visits.
• Change the offer. Sell a bundle, a monthly tune-up plan, or a higher-end service, so each visit brings in more. Or drop the part of the work that costs most to deliver.

Rerun the calculator after each change. Often one change is not enough and two small ones are.

What if the numbers never break even?

If the price is lower than the cost of one sale, you never break even. Each sale loses money, so more sales lose more. The calculator says so plainly: these numbers do not break even at any volume.

Say a $15 repair costs you $18 to deliver. Contribution is minus $3. Ten sales lose $30, a hundred lose $300. Fix the price or the cost. Volume will not help.

One odd case: if contribution is exactly zero and fixed costs are also zero, you break even at any number of sales, and profit stays at zero.

How do I handle more than one product?

Use a blended average per sale. The calculator models one primary offering, so you give it one average price and one average cost.

Say that in a typical month you do 6 flat repairs at $40 and 4 tune-ups at $100, with variable costs of $10 and $30 each.

1. Revenue = (6 × $40) + (4 × $100) = $240 + $400 = $640 across 10 sales, so $64 average price.
2. Variable cost = (6 × $10) + (4 × $30) = $60 + $120 = $180 across 10 sales, so $18 average cost.
3. Contribution = $64 minus $18 = $46 per sale.

Then divide fixed costs by $46 as usual. The answer is only as good as your mix. If tune-ups slip from four in ten to one in ten, the average falls and the real break-even rises. Run it again with the mix you expect at the low end.

Is break-even a forecast?

No. Break-even is a pricing check. It tells you how many sales your price and costs require, not how many you will get.

The SBA says finding your break-even point helps you price your products smarter. That is the use. If the required number looks out of reach, the price or the costs are probably wrong, and you can fix them before you spend. If it looks easy, you still have to find the customers.

Treat the result as a question to take to people. Can you really reach 23 bike owners a month? How to get your first customer is about answering that. Keep the numbers in your plan, and see how to write a business plan for where they go.

Where to go next

Put your own numbers into the break-even calculator. If the answer is higher than you can reach, start with how to price a product or service. For the one-time side of the money, read how much it costs to start a business, which also helps you list your monthly bills.

Common questions

Should I include my own salary in fixed costs?

Include it if you want the business to pay you a set amount each month. Then break-even tells you when you are covering your pay, not just the bills. Leave it out and you are learning only when the business stops losing money.

Why does the calculator round up?

You sell whole units. If the math says 22.62 sales, 22 sales leaves you short and 23 clears the bills. Rounding down would tell you that you break even when you do not.

Does break-even include startup costs?

No. It sets monthly bills against what each sale contributes. One-time purchases before you open belong to the startup cost calculator. To pay those back from sales, add a monthly amount for them to your bills.

What if my costs change every month?

Use a typical month, then test a bad one. If bills run from $900 to $1,100, calculate both. The gap between the answers shows how exposed you are.

Put this in your plan