Add your expected monthly sales to see your profit or loss and your margin of safety, so you can test pricing and cost changes before you make them.
Break-even formula
Break-even units = Fixed costs ÷ (Price − Variable cost per unit)
- Fixed costs
- Rent, salaries, software and other costs that don't change with sales
- Variable cost
- Materials, packaging, delivery and fees per unit
- Contribution
- Price minus variable cost: what each sale adds towards fixed costs
- Margin of safety
- How far sales can fall before you make a loss
Below the break-even point you make a loss; above it, every extra unit adds its full contribution to profit.
For service businesses, treat one billable hour, project or subscription as a unit, and count only costs that rise with each sale as variable.
How to lower your break-even point
There are only three levers, and small moves on each add up.
- Raise prices or move customers to higher-margin products.
- Cut variable costs through better sourcing, packaging or logistics.
- Keep fixed costs flexible early with shared offices and contract staff.
- Track contribution margin monthly, not just revenue.