Margin of Safety Calculator
How far sales can fall before you lose money.
Margin of safety
30.0%
$6,000 above break-even
How the Margin of Safety Calculator works
Margin of safety is the distance between where you are and where you start losing money. A business trading 8% above break-even is one bad month from trouble; one trading 50% above can absorb a shock. It is a measure of resilience rather than performance.
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 is margin of safety calculated?
(Current sales − break-even sales) ÷ current sales × 100. With £20,000 of sales and £14,000 break-even, the margin of safety is £6,000, or 30%.
What is a healthy margin of safety?
Above 20% gives reasonable room to absorb a downturn. Below 10% is fragile — a seasonal dip, a supplier price rise or a platform fee change can put you underwater. Seasonal businesses need considerably more headroom.
How do I improve it?
Either raise sales or lower break-even. Lowering break-even by cutting fixed costs is usually faster and more reliable than raising sales, and it improves the ratio permanently rather than for as long as demand holds.
Does it change through the year?
Substantially for seasonal businesses. A retailer comfortable in December can be well below break-even in February. Calculating it monthly rather than annually is what reveals the months that need planning for.