Break-even Calculator

The break-even point is the number of units you must sell for total revenue to equal total costs (fixed costs plus variable costs). At this point your business has zero profit and zero loss. Selling beyond this point generates profit.

Fixed costs are expenses that stay the same regardless of how many units you produce or sell. Common examples include rent, insurance premiums, salaried staff wages, loan repayments, and software subscriptions.

Variable costs change in direct proportion to production or sales volume. Examples include raw materials, packaging, shipping costs per unit, sales commissions, and direct labour paid per unit produced.

You can lower your break-even point by reducing fixed costs (e.g. renegotiating rent), lowering variable costs per unit (e.g. sourcing cheaper materials), or increasing your selling price per unit. Each approach widens the contribution margin.

The contribution margin ratio is the percentage of each rand of revenue that contributes to covering fixed costs and generating profit. It is calculated as (Selling Price - Variable Cost) / Selling Price. A higher ratio means you reach break-even faster.