Break-Even Calculator
Determine how many units you need to sell to cover all costs and start making profit. Essential for pricing strategy, business planning, and financial viability assessment.
Cost Structure
Rent, salaries, insurance, subscriptions, etc.
Materials, direct labor, packaging, shipping per unit
Pricing & Sales
Target Profit
Quick Examples
Break-Even Point
Units to Sell
2,000
Revenue Needed
$100,000
Break-Even Analysis Chart
Break-even point: 2,000 units where revenue meets total cost
Contribution Margin
Per Unit
$25
Ratio
50.0%
Each sale contributes $25 toward covering fixed costs and profit
To Achieve $20,000 Profit
Units Needed
2,800
Revenue Needed
$140,000
Current Performance (3,000 units)
Margin of Safety
Strong position: Sales can drop 33.3% before losing money
Sales Volume Analysis
| Units Sold | Revenue | Total Costs | Profit/Loss |
|---|---|---|---|
| 0 | $0 | $50,000 | -$50,000 |
| 450 | $22,500 | $61,250 | -$38,750 |
| 900 | $45,000 | $72,500 | -$27,500 |
| 1,350 | $67,500 | $83,750 | -$16,250 |
| 1,800 | $90,000 | $95,000 | -$5,000 |
| 2,250 | $112,500 | $106,250 | $6,250 |
| 2,700 | $135,000 | $117,500 | $17,500 |
| 3,150 | $157,500 | $128,750 | $28,750 |
| 3,600 | $180,000 | $140,000 | $40,000 |
| 4,050 | $202,500 | $151,250 | $51,250 |
| 4,500 | $225,000 | $162,500 | $62,500 |
The Break-Even Formula
Break-Even Units = Fixed Costs ÷ Contribution Margin
Contribution Margin = Selling Price - Variable Cost per Unit
Fixed Costs
$50,000
Contribution ($50 - $25)
$25
Break-Even
2,000 units
Understanding Your Costs
Fixed Costs
Stay the same regardless of how much you sell:
- • Rent and utilities
- • Staff salaries (not per-unit labor)
- • Insurance premiums
- • Software subscriptions
- • Loan repayments
- • Marketing budgets
Variable Costs
Change with each unit produced/sold:
- • Raw materials
- • Per-unit labor (piece work)
- • Packaging
- • Shipping/delivery
- • Payment processing fees
- • Sales commissions
Australian Industry Benchmarks
Typical contribution margins by industry:
| Industry | Typical CM % | Notes |
|---|---|---|
| Software/SaaS | 80-95% | Near-zero variable costs |
| Consulting | 70-85% | Mainly time-based |
| Retail | 25-50% | Depends on product type |
| Restaurants | 30-40% | Food cost ~30% |
| Manufacturing | 20-35% | High material costs |
How to Lower Your Break-Even Point
- 1. Reduce fixed costs: Negotiate rent, cut unnecessary subscriptions, outsource instead of hiring
- 2. Lower variable costs: Bulk purchasing, better supplier terms, reduce waste
- 3. Increase prices: Even small price increases dramatically improve contribution margin
- 4. Change product mix: Focus on higher-margin products or services
- 5. Improve efficiency: Reduce labor time per unit, automate processes
Margin of Safety
The margin of safety measures how much sales can drop before you start losing money:
Danger Zone
< 10%
Very risky
Caution
10-20%
Monitor closely
Healthy
> 20%
Good buffer
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