Free calculator

Break-Even Point Formula and Calculator

Your break-even point is the sales you need to cover all your costs. Below it, you make a loss. Above it, you make a profit. Use the calculator, or watch Claude or ChatGPT work it out from a set of books.

Work it out here

Example figures, per billable hour. Type over them with your own.

Break-even point

2,375 units

Contribution $56 a unit (40%)

In revenue

$332,500

Loss below break-even Profit above

At 3,185 units you make $45,360, a 25% margin of safety.

Get your real break-even point from your books

Connect QuickBooks, Xero or NetSuite, then ask Claude or ChatGPT.

Ask your own books

The formula: Fixed costs ÷ (Price − Variable cost per unit)

Or ask Claude or ChatGPT

Kipper
Question:

What's our break-even point?

Answer:
  • Asking Kipper for last month's profit and loss…
  • Splitting fixed and variable costs…
  • Working out the break-even point…

About $333,000 of sales a month. Last month's sales were $446,000, so you were $112,800 above it.

Break-even point · August
Figure
Fixed costs$133,000
Contribution margin ratio39.9%
Break-even revenue$333,200
Question:

What's our margin of safety?

Answer:
  • Kipper is returning last month's revenue…
  • Comparing it with the break-even point…
  • Working out the share…

25.3%. Your sales could fall by about a quarter before you'd make a loss.

Margin of safety · August
Figure
Revenue$446,000
Break-even revenue$333,200
Margin of safety25.3%
Question:

How has our break-even point moved?

Answer:
  • Kipper is returning the monthly profit and loss…
  • Working out break-even for each month…
  • Lining it up against revenue…

Your margin of safety went up every month. Break-even rose in August because two early bills lowered the margin.

Break-even point · last three months
MonthRevenueBreak-evenMargin of safety
Jun$396,000$312,50021.1%
Jul$413,000$311,30024.6%
Aug$446,000$333,20025.3%
Question:

Which of our costs are fixed?

Answer:
  • Kipper is reading the operating costs off the P&L…
  • Sorting them by size…
  • Adding them up…

Your operating costs stay about the same whatever you sell, so I've treated them as fixed. Payroll is the biggest.

Fixed costs · August
Amount
Payroll$86,000
Rent and facilities$25,500
Software and tools$12,400
Other$9,100
Reply to Claude…
Open the live demo

A recorded example. Open the interactive demo to ask your own questions.

The formula

How to calculate your break-even point

Three steps, and you only need one month's figures.

01

Add up your fixed costs

Costs that stay the same whatever you sell, like rent, salaries and software. Use one month's figures.

02

Work out each sale's contribution

Take the variable cost of one unit from its price. What's left goes toward your fixed costs.

03

Divide fixed costs by contribution

The answer is how many units you need to sell. Sell more than that, and you make a profit.

In units

Fixed costs ÷ (Price − Variable cost per unit)

The sample month in the calculator: $133,000 ÷ ($140 − $84) = 2,375 units.

In revenue

Fixed costs ÷ Contribution margin ratio

Each $140 sale leaves $56, which is 40%. So $133,000 ÷ 40% = $332,500.

In your books

Find fixed and variable costs on your profit and loss

Your P&L already sorts most of them. Then break-even revenue is your operating costs divided by your gross margin.

  • Cost of sales rises and falls with what you sell, so treat it as variable.
  • Operating costs mostly stay the same each month, so treat them as fixed.
  • Here, $133,000 ÷ 39.9% is about $333,200 a month.
Profit and loss · August Sample business
Revenue $446,000
Cost of sales Variable $268,000
Gross profit 39.9% margin $178,000
Payroll Fixed $86,000
Rent and facilities Fixed $25,500
Software and tools Fixed $12,400
Other Fixed $9,100
Net profit $45,000
Break-even revenue $333,200

Related terms

Break-even terms and their formulas

Each one is a step toward the break-even point, or a way to read it.

Contribution margin

What one sale leaves after its variable costs.

Price − variable cost per unit

Contribution margin ratio

The same, as a share of the price.

Contribution margin ÷ price

Break-even point in units

How many you need to sell to cover every cost.

Fixed costs ÷ contribution margin

Break-even point in revenue

The sales you need, in dollars.

Fixed costs ÷ contribution margin ratio

Margin of safety

How far sales could fall before you make a loss.

(Sales − break-even sales) ÷ sales

Side by side

A calculator vs asking your books

A calculator works out the figures you type. Here's what changes when Claude or ChatGPT can read your books instead.

Fixed costs

Typing the numbers

An estimate from memory.

Connected to your books

Last month's real figure, from your P&L.

Variable costs

Typing the numbers

A guess at what one unit costs you.

Connected to your books

Your actual cost of sales, from the same P&L.

Comparing months

Typing the numbers

Type each month's figures in too.

Connected to your books

Ask how it's moved since last month.

Next month

Typing the numbers

Find the figures and type them in again.

Connected to your books

Ask the same question. The figures are current.

Trusting the answer

Typing the numbers

It's only as good as what you typed.

Connected to your books

Every figure traces back to your books.

Connect your books and skip the typing

Start a free trial, connect QuickBooks, Xero or NetSuite, and ask for your real break-even point.

Ask your own books See pricing

Both assistants

Use Claude or ChatGPT: Kipper works with both

Your team can use Claude or ChatGPT to work out break-even and ask follow-up questions. Either way, the figures come straight from your books. Click a card to see it in the demo.

Kipper
Question:

What's our break-even point?

Answer:
  • Asking Kipper for last month's profit and loss…
  • Splitting fixed and variable costs…
  • Working out the break-even point…

About $333,000 of sales a month. Last month's sales were $446,000, so you were $112,800 above it.

Break-even point · August
Figure
Fixed costs$133,000
Contribution margin ratio39.9%
Break-even revenue$333,200
Question:

What's our margin of safety?

Answer:
  • Kipper is returning last month's revenue…
  • Comparing it with the break-even point…
  • Working out the share…

25.3%. Your sales could fall by about a quarter before you'd make a loss.

Margin of safety · August
Figure
Revenue$446,000
Break-even revenue$333,200
Margin of safety25.3%
Question:

How has our break-even point moved?

Answer:
  • Kipper is returning the monthly profit and loss…
  • Working out break-even for each month…
  • Lining it up against revenue…

Your margin of safety went up every month. Break-even rose in August because two early bills lowered the margin.

Break-even point · last three months
MonthRevenueBreak-evenMargin of safety
Jun$396,000$312,50021.1%
Jul$413,000$311,30024.6%
Aug$446,000$333,20025.3%
Question:

Which of our costs are fixed?

Answer:
  • Kipper is reading the operating costs off the P&L…
  • Sorting them by size…
  • Adding them up…

Your operating costs stay about the same whatever you sell, so I've treated them as fixed. Payroll is the biggest.

Fixed costs · August
Amount
Payroll$86,000
Rent and facilities$25,500
Software and tools$12,400
Other$9,100
Reply to Claude…
Open the live demo

Connect once, then ask from either one

Read-only access to QuickBooks, Xero or NetSuite, with the same permissions behind each.

Schedule a demo

FAQ

Break-even questions

What people ask about break-even points, and how to work them out.

It's the level of sales that covers all your costs, so you make no profit and no loss. Sell more than that, and you're in profit.
Break-even units = fixed costs ÷ (price − variable cost per unit). For break-even revenue, divide fixed costs by your contribution margin ratio instead.
Take the variable cost of one unit from its price. Then divide your fixed costs by what's left. With $133,000 of fixed costs and $56 left from each sale, that's 2,375 units.
Divide fixed costs by your contribution margin ratio. If 40% of each sale is left after variable costs, $133,000 ÷ 0.40 = $332,500.
Use one contribution margin ratio across everything you sell. Divide your fixed costs by it, and you get break-even revenue for the whole business. If all your variable costs sit in cost of sales, that ratio is your gross margin.
Either works, as long as fixed costs and sales cover the same period. Monthly fixed costs give you a monthly break-even point.
Fixed costs stay about the same whatever you sell, like rent and salaries. Variable costs rise and fall with sales, like materials and subcontractors.
It's what each sale leaves after its variable costs. That money pays your fixed costs first, and the rest is profit. If all your variable costs sit in cost of sales, the ratio is your gross margin. Try the gross margin calculator.
It's how far your sales could fall before you make a loss. Margin of safety = (sales − break-even sales) ÷ sales. At $446,000 of sales and a $333,200 break-even point, it's about 25%.
It tells you the sales you need to cover your costs, and how far above that you are. It also shows how a new cost or a price change would move the point.
Cut fixed costs, raise prices, or lower the variable cost of each sale. Any one of those means you need fewer sales to cover your costs.
Yes, once it can see your books. Connected through Kipper, it reads your real costs and sales from QuickBooks, Xero or NetSuite, read-only. Then it works out the break-even point and shows its work.
QuickBooks, Xero and NetSuite. Kipper reads the profit and loss from all three.

Get your real break-even point from your books

One read-only connection to QuickBooks, Xero or NetSuite. Then ask Claude or ChatGPT for your break-even point, and how it's moved. We'll help you set it up.

Ask your own books Schedule a demo
QuickBooks Xero NetSuite Read-only Audit-logged