How to Calculate Your Break-Even Point
Learn how to work out the break-even point for your business: the number of units or revenue needed to cover all your costs.
What is break-even?
The break-even point is where your total revenue exactly equals your total costs. Below it, you make a loss. Above it, you make a profit. Knowing your break-even point helps you set prices, plan sales targets, and understand the minimum viable volume for your business.
The break-even formula
Break-even units = Fixed costs ÷ Contribution per unit
Where contribution per unit = Selling price – Variable cost per unit.
For example: Fixed costs £4,000/month, selling price £20, variable cost £8. Contribution = £12. Break-even = 4,000 ÷ 12 = 334 units.
How to reduce your break-even point
- Increase your selling price (if the market allows)
- Reduce variable costs per unit (cheaper materials, better supplier deals)
- Lower fixed costs (negotiate rent, reduce overheads)
- Increase average order value (bundles, upsells)
Break-even vs markup vs margin
Break-even tells you the volume needed. Markup and margin tell you the pricing relationship between cost and price. They are complementary: once you know your margin, you can calculate break-even, and vice versa.
Try the calculator
Use our Break-Even Calculator to find your break-even point in units and revenue.
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Last updated
Last reviewed: 2026-04-12T13:08:32.782Z.