How to Calculate Your Break-even Point

Turn fixed costs and contribution per sale into the number of sales needed to cover costs.

Separate fixed and variable costs

Fixed costs do not usually change with each sale in the short term. Variable costs rise with each unit sold or job completed.

Subtract variable cost from selling price. That contribution is what each sale provides towards fixed costs and then profit.

Divide fixed costs by contribution per unit and round up to a whole sale. Revisit the calculation when costs or prices change materially.

ProfitMaths guides provide general educational information, not personalised accounting, tax, legal or financial advice.