CostPrism
Business Updated June 2026

Break-Even Calculator

Calculate your break-even point in units and monthly revenue — including contribution margin, margin of safety, and what-if pricing scenarios.

National avg: Varies by business
Range: Based on your cost structure
Used by 31,240 people

Enter Your Details

What Affects the Cost?

1. Break-Even Formula

Break-Even Units = Fixed Costs ÷ Contribution Margin Per Unit. Contribution Margin = Selling Price - Variable Cost Per Unit. Break-Even Revenue = Break-Even Units × Selling Price. Example: Fixed costs $10,000/month, variable cost $30/unit, selling price $50/unit. Contribution margin = $20. Break-even = $10,000 ÷ $20 = 500 units/month = $25,000 revenue.

2. Margin of Safety

Margin of Safety = (Actual Sales - Break-Even Sales) / Actual Sales × 100. If you sell 600 units and break-even is 500 units, margin of safety = (600-500)/600 = 16.7%. A margin of safety under 15% means small revenue drops can quickly cause losses. Businesses with high fixed costs (restaurants, retail) are especially sensitive to revenue volatility.

3. Improving Your Break-Even Position

Three levers: (1) Reduce fixed costs — every dollar cut from rent or salaries directly lowers break-even. (2) Raise prices — a 10% price increase on a 40% margin product reduces units needed by ~20%. (3) Reduce variable costs — renegotiate COGS, improve efficiency. Most businesses can reduce break-even by 15–30% without major sacrifices.

2026 Cost Reference Table

Type / Option Typical Cost Range
Retail store (typical fixed costs) $15,000 – $30,000/month
Restaurant (typical fixed costs) $25,000 – $60,000/month
Online store (low fixed costs) $2,000 – $8,000/month
SaaS business $10,000 – $50,000/month
Service business / Agency $5,000 – $20,000/month
Food truck $4,000 – $8,000/month

Frequently Asked Questions

Break-Even Units = Fixed Costs ÷ (Selling Price - Variable Cost Per Unit). The denominator is called the contribution margin per unit. Break-Even Revenue = Break-Even Units × Selling Price. To include a profit target: Break-Even Units = (Fixed Costs + Target Profit) ÷ Contribution Margin.

Contribution margin is the amount each sale contributes to covering fixed costs and profit: Selling Price - Variable Cost = Contribution Margin. A product selling for $100 with $60 variable cost has a $40 contribution margin (40%). Higher contribution margins mean fewer units needed to break even. Service businesses typically have 60–80% contribution margins; product businesses 20–50%.

Most small businesses take 2–3 years to reach profitability. However, some business types break even faster: online businesses and service businesses often reach break-even in 6–18 months. Restaurants typically take 2–4 years. Retail stores 2–3 years. Planning your break-even timeline before launch is critical for securing adequate startup capital.

Automate Your Break-Even Tracking

Wave is completely free accounting software. Track income, expenses, and profitability in real time with no subscription fees.

Manage Cash Flow Free — Wave Accounting QuickBooks — Real-Time P&L Tracking

Tips Before You Start

  • ✓ Contribution margin = selling price minus variable cost — this is what each sale contributes to fixed costs
  • ✓ Lowering fixed costs (rent, salaries) reduces your break-even point faster than cutting variable costs
  • ✓ A 10% price increase reduces break-even units more than a 10% cost reduction in most businesses
  • ✓ Track break-even monthly — seasonality can make a profitable annual business cash-flow negative in slow months
  • ✓ Margin of safety = how far you are from break-even — aim for at least 20% above break-even for stability

Cost by State — 2026

Based on national average pricing adjusted for local labor and material costs.