Break-Even Analysis Calculator

Break-even analysis determines the point at which total revenue equals total costs, meaning your business is neither making nor losing money. It's essential for pricing decisions, sales targets, and investment planning.

Key Components

• Fixed Costs: Expenses that don't change with sales volume - rent, salaries, software subscriptions, marketing spend.
• Variable Costs: Costs that increase with each sale - materials, commissions, shipping, payment processing.
• Contribution Margin: The amount each sale contributes toward covering fixed costs (Price - Variable Cost).
• Safety Margin: How far sales can drop before reaching break-even point.

Why Break-Even Analysis Matters

• Set Sales Targets: Know exactly how many sales you need to cover costs.
• Price Products: Understand how pricing changes affect profitability.
• Plan Marketing Budgets: Calculate ROI required from campaigns.
• Make Investment Decisions: Evaluate if new fixed costs are justified.
• Assess Risk: Understand your buffer before losses occur.

How to Lower Your Break-Even Point

• Reduce Fixed Costs: Negotiate rent, switch to cheaper tools, outsource where possible.
• Lower Variable Costs: Negotiate supplier prices, reduce commissions, optimize fulfillment.
• Increase Prices: Higher contribution margin means fewer sales needed.
• Improve Efficiency: Get more output from existing resources.

Break-Even for Marketing Campaigns

Apply break-even analysis to individual campaigns by treating campaign spend as the fixed cost and calculating how many sales are needed to cover it:

For example, a $5,000 ad campaign with $50 profit per sale needs 100 sales to break even.