Find the exact number of sales you need each month to cover your costs. Enter your fixed costs, price and variable cost per sale to see your break-even units, break-even revenue and contribution margin — plus the sales needed to hit a profit target.
Last updated: · figures current for the 2025–26 financial year.
Rent, software, insurance, salaries — costs that don't change with sales volume.
What the customer pays for one unit or job (ex-GST).
Materials, packaging, card fees, shipping — costs that rise with each sale.
The profit you actually want to take home each month. Leave blank to see break-even only.
Break-even units are rounded up to the next whole sale — you can't sell a fraction of a unit and still cover your costs. Use GST-exclusive prices and costs so the figures reflect money that actually stays in the business. General information, not financial advice.
Break-even analysis rests on one idea: every sale you make "contributes" a slice of money toward your fixed costs. Once those fixed costs are fully covered, the next sale starts making profit. Work out how big that slice is and the rest is simple division.
The margin each sale contributes, after its own variable cost:
Contribution margin = Price per unit − Variable cost per unit
As a percentage of price: Margin % = Contribution margin ÷ Price. A higher percentage means more of
every dollar you take is available to cover fixed costs and profit.
How many sales you need to cover all your fixed costs for the month:
Break-even units = Fixed costs ÷ Contribution margin (rounded up to a whole sale)
The dollar sales those units represent:
Break-even revenue = Break-even units × Price per unit
Treat your desired profit as an extra cost to cover:
Units for target = (Fixed costs + Target profit) ÷ Contribution margin
A quick guard: if your variable cost per unit is equal to or higher than your price, the contribution margin is zero or negative and there is no break-even point — every sale loses money. Fix the pricing or costs first.
Sam runs a small candle business from a rented studio. Each candle sells for $40. The wax, wick, jar, label and card-processing fee come to $16 per candle. Studio rent, insurance, the online store subscription and a part-time helper add up to $4,800 a month in fixed costs.
So Sam has to sell 200 candles — about 7 a day — just to keep the studio open, before earning a cent. If Sam wants to take home $2,400 in profit each month, the maths changes: ($4,800 + $2,400) ÷ $24 = 300 candles, or $12,000 in monthly revenue. That single number reframes the whole plan: it's the difference between "surviving" and "paying myself a wage".
Now watch what a price tweak does. If Sam lifts the price to $45 (margin rises to $29), break-even drops to 166 candles. Drop it to $35 for a sale (margin falls to $19) and break-even jumps to 253 candles — a "small" discount that quietly demands 53 extra sales a month just to stay even.
General information, not financial advice.
A break-even number is only useful if you act on it. Here's how to turn it into a pricing and sales plan that pays you.
Missed costs make break-even look easier than it is. List every fixed cost (rent, software, insurance, wages) and every variable cost per sale (materials, packaging, card and platform fees, shipping) before you trust the number.
Compare your break-even units to what your market can actually deliver. If you need to sell more than your channels can realistically move, the fix is usually a higher price or a leaner cost structure — not just "sell harder".
Break-even is the floor, not the goal. Price so your contribution margin covers fixed costs and leaves a genuine profit — then use the "target profit" figure above to convert the wage you want into a monthly sales goal.
A promotion, a new hire, or a rent increase all move your break-even point. Recalculate first so you know exactly how much extra you need to sell to stay ahead — before you commit.
Your break-even point is the level of sales where your total revenue exactly covers your total costs — you make neither a profit nor a loss. Sell one unit more and you're in profit; one unit fewer and you're running at a loss.
It's usually expressed two ways: break-even units (how many sales you need per month) and break-even revenue (the dollar sales those units represent). Knowing both tells you the minimum you have to hit before your business starts genuinely making money.
For an Australian small business, the break-even point is one of the fastest sanity checks there is: if the number of sales you need looks impossible for your market, the pricing or cost structure needs rethinking before you commit.
Contribution margin is the amount left over from each sale after you subtract the variable cost of producing that sale. In plain terms: price − variable cost per unit.
Example: you sell a product for $50 and it costs you $20 in materials and card fees per unit. Your contribution margin is $30 — that's the amount each sale "contributes" toward covering your fixed costs (rent, software, wages) and, once those are covered, your profit.
It matters because break-even is simply fixed costs ÷ contribution margin. A higher margin per unit means you need fewer sales to break even. If your contribution margin is zero or negative, no volume of sales will ever cover your fixed costs — you'd lose money on every sale, so you can't break even at all.
Fixed costs stay roughly the same no matter how much you sell. In an Australian small business these are things like shop or studio rent, software subscriptions (Xero, your booking system), insurance, a salaried admin person, and phone/internet. Whether you make 10 sales or 500, the rent is the same.
Variable costs rise and fall with each sale. These include materials and stock, packaging, payment-processing fees (card surcharges, Stripe/Square percentages), shipping, and per-job contractor labour.
Break-even maths depends on splitting these correctly. Fixed costs go in the "monthly fixed costs" box; variable costs go in "variable cost per unit". Mixing them up — for example treating rent as a per-unit cost — will give you a break-even number that's badly wrong.
Price has a bigger effect on break-even than most people expect, because it changes your contribution margin directly.
Say your fixed costs are $6,000/month and your variable cost is $20 per unit. At a $50 price your margin is $30, so break-even is 200 units. Lift the price to $60 and your margin jumps to $40 — break-even falls to 150 units. Drop the price to $40 and your margin shrinks to $20, pushing break-even up to 300 units.
A small price change can move your break-even target by a lot. That's why a discount that "only" cuts the price 10% can quietly require you to sell far more just to stay even. Always re-run the numbers before you run a sale.
Break-even tells you where you stop losing money. To work out the sales needed to hit an actual profit target, you treat your desired profit like an extra fixed cost you also have to cover.
The formula is units for target = (fixed costs + target profit) ÷ contribution margin. If your fixed costs are $6,000, you want $3,000 profit a month, and your margin is $30 per unit, you need (6,000 + 3,000) ÷ 30 = 300 units — versus 200 just to break even.
This is the number that actually pays you a wage. Break-even keeps the doors open; the target number is what turns the business into an income. Enter a target in the calculator above to see both side by side.
Use GST-exclusive figures throughout. If you're GST-registered, the GST you collect isn't yours — it's money you hold for the ATO — so it shouldn't count as revenue in a break-even calculation. Likewise, the GST portion of your business purchases is usually claimed back as a credit, so it isn't a real cost to you.
Enter your price ex-GST and your variable costs ex-GST, and your break-even units and revenue will reflect the money that actually stays in the business. If you're not registered for GST (turnover under $75,000), then GST doesn't apply and you simply use your real prices and costs.
General information, not financial advice.
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