Break-Even Sales Calculator

Margin moves it more than cost cuts do.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

Fixed costs per month

Contribution margin

Current monthly revenue

Profit target

Break-even revenue

$86,364

$120,455 for the profit target

Fixed costs$38,000

Contribution margin44%

Revenue for the target$120,455

Margin of safety21.5%

Break-even revenue is fixed costs divided by contribution margin, so a one-point margin improvement lowers it by more than a one-point cost cut does. At 44%, every pound of fixed cost requires $2.27 of revenue to cover.

How the Break-Even Sales Calculator works

Break-even revenue is fixed costs divided by contribution margin, so a one-point margin improvement lowers it by more than a one-point cost cut does. That asymmetry is worth knowing before deciding which lever to pull.

Also known as: sales needed to break even · break even revenue calculator · how much must I sell to cover costs

The revenue at which the business stops losing

Break-even sales is fixed costs divided by contribution margin percentage. It gives a revenue figure rather than a unit count, which is the useful form for a business selling many products.

Fixed costs of £14,000 a month against a 38% contribution margin gives a break-even of £36,842. Below that the business loses money; above it, each additional pound of sales contributes 38p.

The margin figure has to be the blended contribution across the actual sales mix, which means it moves when the mix moves. A month weighted towards low-margin lines has a higher break-even than the average implies, and the calculation should be revisited when the mix changes materially rather than annually.

Getting the fixed cost list right

Fixed costs are those incurred regardless of sales volume: rent, salaries, insurance, software, professional fees, loan payments.

Advertising is the item that causes most disagreement. It is discretionary rather than fixed or variable, and its treatment changes the answer substantially. Treating it as fixed produces a break-even that assumes you keep spending; treating it as variable assumes it scales with revenue, which it does not automatically.

The practical approach is to treat committed advertising as fixed and discretionary spend separately, producing two break-even figures: one with advertising and one without. The second is the survival number and the first is the operating one.

Margin of safety

The gap between current sales and break-even, expressed as a percentage of current sales, is the margin of safety. It answers how far revenue can fall before losses begin.

A business at £60,000 monthly with a £37,000 break-even has a 38% margin of safety, which is comfortable. One at £42,000 against the same break-even has 12%, which is not.

The number worth watching is the trend rather than the level. A business adding fixed costs while revenue grows can have rising profit and a falling margin of safety simultaneously, which means it is becoming more profitable and more fragile at the same time.

Break-even in a seasonal business

Monthly break-even is misleading where sales are seasonal, because the business is expected to lose money in some months and make it in others.

The relevant figure is annual: total annual fixed costs divided by contribution margin, compared against annual revenue. A business that breaks even over a year while losing money for eight months of it is functioning normally.

What that requires is cash to survive the losing months, which is a separate calculation and the one that actually determines survival. Break-even tells you whether the model works; the cash forecast tells you whether you reach the point where it does.

Moving the number

The three levers act at different speeds and different magnitudes. Raising prices increases contribution margin immediately and is the fastest.

Reducing variable costs has the same effect and takes longer, since supplier negotiations and packaging changes run on their own timescales.

Cutting fixed costs moves the number directly and is usually the smallest lever despite feeling the most decisive. Because break-even is fixed costs divided by margin, a one-point improvement in margin can be worth more than several thousand pounds off the overhead, which is not most people's intuition and is worth calculating before deciding where to focus.

Where to go next

The Break-Even Sales question rarely arrives on its own. These are the ones that usually come with it:

Break-Even Analysis Calculator — Margin of safety is the number to watch.
Profit Goal Calculator — Tax comes off the profit.
Cost Structure Calculator — Step costs are the trap in capacity planning.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

How do I calculate break-even sales?

Fixed costs divided by contribution margin. At 44% margin, every pound of fixed cost needs £2.27 of revenue behind it.

Why does margin move it more?

Because it changes the divisor. Raising margin from 44% to 45% lowers break-even revenue by more than cutting a corresponding amount of fixed cost does.