How to Calculate Your Business's Break-Even Point
Your break-even point is the amount of revenue needed to cover all costs, with nothing left over yet as profit — a number every owner should be able to state without checking a spreadsheet.
The basic formula
Break-even revenue equals fixed costs divided by your gross margin percentage. Fixed costs are the ones that don't change with sales volume — rent, salaries, software. Gross margin is what's left of each sale after direct costs.
Why this number changes decisions
Knowing your break-even point turns a vague goal like 'sell more' into a specific, trackable target, and makes it obvious how a price change or new fixed cost shifts what you actually need to hit.
This is a five-minute calculation with numbers your bookkeeper already has on hand each month.
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