Break-even Calculator

The break-even point is the sales volume at which total revenue exactly equals total cost — the moment your business starts making money on the next unit sold. Every unit sold above break-even contributes its full contribution margin to profit.

Contribution margin: the engine of break-even

Contribution margin per unit is the price minus the variable cost. It's the amount each sale 'contributes' toward covering fixed costs. Once contribution margin × units sold equals fixed costs, you've broken even.

Contribution margin = Price per unit − Variable cost per unit

Break-even formula

Divide your fixed costs by the contribution margin to get the unit volume, then multiply by price to get the break-even revenue.

Break-even units = Fixed costs ÷ Contribution margin | Break-even revenue = Break-even units × Price

Worked example

A coffee shop has the following monthly figures:

1. Fixed costs (rent + salaries): 10,000 SAR/month
2. Variable cost per cup (beans + cup + lid): 6 SAR
3. Selling price per cup: 10 SAR
4. Contribution margin = 10 − 6 = 4 SAR/cup
5. Break-even units = 10,000 ÷ 4 = 2,500 cups
6. Break-even revenue = 2,500 × 10 = 25,000 SAR

When is break-even impossible?

If your variable cost exceeds your selling price, every sale loses money — you can never reach break-even regardless of volume. You need to either raise prices, reduce variable costs, or both before scaling.

Practical tips

• Recalculate whenever fixed costs change (new lease, new hire).
• Track contribution margin per SKU — drop the ones below your target.
• Use break-even as a sanity check before launching a new product.
• Beyond break-even, every unit adds its full contribution margin to profit.