How the break-even calculator works
Last updated 10 November 2026
Break-even answers the question every new business asks: how much do I need to sell before I stop losing money?
How it works
- Profit on each unit = price − variable cost.
- Break-even units = (fixed costs + profit target) ÷ profit on each unit, rounded up.
Worked example
With the starting figures:
- Each unit leaves R 150.00 after variable costs.
- You need 200 units to cover fixed costs of R 30 000.
- That is R 50 000 in sales.
Fixed and variable costs
Break-even depends on splitting costs into two kinds. Fixed costs stay the same however much you sell in the period, such as rent, salaries and subscriptions. Variable costs rise with every unit you sell, such as materials, packaging and delivery.
Costs do not always fit neatly into one group. A cost that rises in steps, like hiring a second person, can be handled by running the calculator twice with different fixed costs.
How to read your result
The headline is the number of units you must sell. It is rounded up, because you cannot sell part of a unit. Below it you will see the profit on each unit before fixed costs, the share of the price left after variable costs and the total sales needed.
The chart shows sales and total costs as units sold grow. The point where the sales line overtakes the costs line is the break-even point. Before it you are making a loss. After it each extra unit adds its profit.
Adding a profit target
The optional profit field changes the question. Instead of asking how much you must sell to cover costs, it asks how much you must sell to cover costs and earn that profit. The profit is added to the fixed costs before dividing, so the answer is always higher than the plain break-even figure.
Common mistakes
- Using fixed costs for a year with a monthly sales plan. Keep the period the same.
- Leaving out a variable cost, such as card fees or commission. This makes break-even look easier than it is.
- Treating your own pay as free. If you need an income, add it to the fixed costs.
- Forgetting that the price must be higher than the variable cost. Otherwise each sale loses money and no number of sales can cover the fixed costs.
What this does not cover
The calculator assumes one product at one price. It does not model several products, discounts for bulk orders, VAT or the timing of when money comes in and goes out. For timing, see the cash flow forecast.
A small worked idea
Break-even is the fixed costs divided by what each unit contributes. In the worked example the fixed costs are R 30 000 and each unit contributes R 150.00, so the division gives the units you need. Because you cannot sell part of a unit, the answer is rounded up to 200.
You can use the same idea to test changes. Raise the price a little, or cut a variable cost, and see how far the number of units falls.
Things to watch
- Use realistic fixed costs for the same period as your sales.
- Prices and costs change. Re-run it when they do.
To see timing, use the cash flow forecast. Read the full disclaimer.