Your breakeven number is the most useful number you're not tracking
Breakeven tells you how much you need to sell each month before you make a single dollar of profit. Here is how to find yours in five minutes, and what to do with it.
Ask a small business owner how the month is going and you'll usually hear about sales: busy, slow, better than last year. Sales matter. But they don't answer the question that keeps owners up at night: am I actually making money?
Breakeven answers that question. It is the amount you need to sell in a month to cover every bill, before profit starts.
The idea in one picture
Every sale does two jobs. Part of it pays for the sale itself, like materials, supplies, or card fees. Whatever is left over, your margin, goes toward the fixed bills that arrive no matter what: rent, insurance, software, loan payments, and your own pay.
Breakeven is the point where those leftover pieces add up to your fixed bills.
Illustrative example only: $9,000 in fixed monthly costs and a 60% margin on each sale give a breakeven of $15,000 in monthly sales.
In this example, the bakery's first $15,000 of sales each month only keeps the lights on. Profit comes from sales above that line. If a slow month brings in $14,000, the bakery loses money, even though it was "pretty busy."
Find yours
The free breakeven calculator below does the math. Enter your monthly fixed costs and your average margin. You'll see your breakeven sales and how far sales can fall before you lose money.
What to do with your number
- Write it where you'll see it. Put it on the wall, in your phone notes, or on the first page of your notebook.
- Check it weekly. Divide your breakeven by four, and you know whether each week is above or below the line.
- Use it before you add a fixed cost. A new hire or a bigger space raises your breakeven. Know by how much before you sign. The new hire calculator can help.
- Revisit your prices. If breakeven is uncomfortably close to your normal month, your prices may be too low for today's costs. See the pricing and inflation tool.
Frequently asked questions
What is a breakeven point for a small business?
It's the amount you need to sell each month to cover all your costs. Below it you lose money; above it, every sale adds profit.
How do I calculate my breakeven sales?
Divide your monthly fixed costs by your margin percentage. For example, $9,000 in fixed costs and a 60% margin means you need $15,000 in monthly sales to break even.
