Guide
How to work out your break-even point
Your break-even point is the sales you need each month to cover every cost, before you make a single unit of profit. Knowing it turns a vague worry into a clear target.
The two figures you need
- Your fixed costs a month: rent, salaries, software, insurance, everything that does not change with sales
- Your gross margin: what is left of each sale after its direct costs, as a percentage
The calculation
Break-even sales = fixed costs ÷ gross margin.
Example: fixed costs of 30,000 a month and a gross margin of 40%. Break-even sales are 30,000 ÷ 0.40 = 75,000 a month. Sell 75,000 and you cover every cost; every sale above that earns 40% of its value as profit.
What to do with it
- Compare it with your actual sales each month: how far above or below are you?
- Test decisions against it: a new hire raises fixed costs, so how much more must you sell?
- Improve it from either side: higher margin lowers it, lower fixed costs lower it
Your number, every month
Big4CFO calculates your break-even sales from your own books every month, and shows how far above it you are.
Have it worked out on your own figures
Big4CFO checks your books to the cent and produces this every month, from your own records. One-time reports cost $49 (one month), $99 (three months) or $199 (twelve months). Monthly plans start at $349 a month (Foundational), with Growth at $599, Leverage at $899 and Capital Stack at $1,999.
Questions
- What if my margin changes month to month?
- Use an average of the last three months for a steadier figure, and recheck it whenever prices or supplier costs change.
See it on your own figures
One-time reports from $49, delivered within minutes. Monthly plans from $349. Every payment carries a 14-day money-back guarantee.