Business Break-Even Calculator

Business break-even analysis finds the point where cumulative revenue has covered every startup and ongoing cost. It is the month you stop losing money and start keeping it.

Core formulas: Monthly Net Profit = Revenue − Fixed Costs − Variable Costs Break-Even Point (months) = Total Startup Costs ÷ Monthly Net Profit Break-Even Revenue (units) = Fixed Costs ÷ (Price per Unit − Variable Cost per Unit)

Where:

• Startup costs = one-time launch expenses (equipment, licenses, deposits, inventory, website)
• Fixed costs = recurring costs that don’t change with sales (rent, salaries, insurance, subscriptions)
• Variable costs = costs that scale with revenue (raw materials, shipping, sales commissions, payment fees)
• Revenue = total income from sales per month

Contribution margin: Contribution Margin = Price per Unit − Variable Cost per Unit This is how much each sale contributes toward covering fixed costs and eventually generating profit.

Worked example: A bakery launches with:

• Startup costs: $40,000
• Monthly fixed costs: $6,000 (rent $2,500, staff $2,800, utilities and insurance $700)
• Monthly revenue: $14,000
• Monthly variable costs: $4,200 (ingredients and packaging, 30% of revenue)

Monthly Net Profit = $14,000 − $6,000 − $4,200 = $3,800 Break-Even = $40,000 ÷ $3,800 = 10.53 months

The calculator rounds that up and reports 11 months, because you have not actually recovered the $40,000 until the eleventh month finishes. Half a month of profit does not arrive in halves.

Per-unit break-even (selling $5 muffins, $1.50 variable cost): Contribution Margin = $5.00 − $1.50 = $3.50 Break-Even Units = $6,000 ÷ $3.50 = 1,714.3, so 1,715 muffins a month

Same rounding logic. Sell 1,714 and you are a dollar short of covering the fixed costs.

Notice what the per-unit view exposes that the monthly view hides: at $14,000 of revenue the bakery is selling about 2,800 muffins a month, so it clears break-even by roughly 1,085 units. Every one of those extra muffins is $3.50 straight to the bottom line. That is the number to watch when someone suggests a discount.

Industry benchmarks: most small businesses break even inside 18 to 24 months. Restaurants usually take two to three years, which is why undercapitalized ones close in year two rather than year one. Software with near-zero variable cost can get there in under 12 months. Work out your break-even before you raise money or take on debt, not after, because it is the first number any lender will ask for and the one that decides how much runway you actually need.