What is the break-even point?

Your break-even point is the level of sales at which you cover all your costs — fixed and variable — but make zero profit. Any sale above that point starts adding to profit. Below it, you're losing money.

What's the difference between fixed and variable costs?

Fixed costs stay the same regardless of how much you sell — rent, salaries, insurance, internet, accounting fees. Variable costs change with every sale — raw materials, packaging, courier fees, card-machine fees. Get this split right or your break-even number will be wrong.

What is contribution margin?

Contribution margin is what's left from each sale after you pay the variable cost. If you sell something for R250 and it cost R100 to make, your contribution margin is R150 — that R150 goes towards covering your fixed costs (rent, salaries, etc). Once enough sales have contributed enough Rands to cover all fixed costs, you've broken even.

Why does my contribution margin matter more than my price?

Two products at the same R250 price can have wildly different contribution margins. One with R100 variable cost contributes R150 to fixed costs. One with R200 variable cost only contributes R50. The first lets you break even with one-third the sales of the second. Contribution margin — not headline price — drives how viable a product is.

Should I include my own salary in fixed costs?

Yes — if you want a realistic number. Many owners leave themselves out so the business looks like it breaks even, when really it's only breaking even because they're working for free. Include a fair monthly wage for yourself. That's the real break-even number.

How do I lower my break-even point?

Three levers: (1) raise the selling price, (2) reduce variable cost per unit (cheaper suppliers, better packaging), or (3) cut fixed costs (move to a cheaper space, share an office, drop subscriptions you don't use). Even small changes compound — dropping fixed costs by R5,000 a month can drop your break-even by dozens of units.

What if I sell multiple different products?

Use a weighted average contribution margin. Add up the contribution margin across all products you expect to sell, divided by the number of units. For a v1 estimate, pick your most representative product and use those numbers — it's not perfect but it's directionally correct.

Is break-even the same as profitable?

No. Break-even just means you covered costs. Profitable means you covered costs and have money left over. Once you know your break-even, set a target above it — that surplus is your profit and your safety margin.

Does VAT affect break-even?

If you're VAT-registered, the 15% you collect is SARS's money, not yours. Calculate break-even using VAT-exclusive prices and VAT-exclusive variable costs. If you're not VAT-registered, use the prices as-is.

Is my data saved anywhere?

No. Every calculation runs entirely in your browser. We never see your numbers and nothing is stored on a server.

Cash Flow & P&L

Break-Even Calculator

Work out how many units you need to sell each month to cover your costs. The first number every small business owner should know.

Monthly fixed costs

Rent, salaries, utilities — costs that don't change with sales

Selling price per unit

Variable cost per unit

Materials, packaging, transaction fees per sale

Units sold per day (optional)

To estimate how long until you break even

Break-even

167 units

per month, to cover all costs

Break-even revenue: R 41 666,67per month
Contribution margin: 60.0%R 150,00 per unit
Selling price: R 250,00
Variable cost: R 100,00
Days to break-even: 17 daysat 10 units/day

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Key takeaways

Break-even is the number of sales you need each month to cover all your costs — fixed and variable. Below it you lose money; above it you start making profit.
Contribution margin matters more than headline price. The same R250 price with different variable costs creates very different products — and that gap is what drives how viable each one is.
Always include your own salary in fixed costs. Founders who leave themselves out think the business breaks even when it's really just breaking even with them working for free.
Three levers lower break-even: raise the price, reduce variable cost per unit, or cut fixed costs. Small fixed-cost reductions compound across every sale.
Break-even is the floor, not the goal. A healthy small business aims to operate at 150–200% of its break-even number for both profit and a buffer in slow months.

Knowing your floor

What break-even actually tells you

Most small business owners can tell you their selling price. Fewer can tell you their break-even point. That second number is more important — it’s the floor below which the business loses money no matter how busy you look.

The formula

Break-even is simpler than it sounds.

Break-even units = Fixed costs ÷ (Selling price − Variable cost)

The bottom of that fraction is your contribution margin — the Rands each sale puts towards your fixed costs. Divide your total fixed costs by that, and you have the number of sales required to cover everything.

A real example

Say you bake and sell cakes from home.

Fixed costs: R8,000 per month (your own modest wage, electricity, internet, a small share of rent, a marketing budget).
Selling price: R350 per cake.
Variable cost: R120 per cake (ingredients, packaging, delivery fuel).

Contribution margin per cake: R350 − R120 = R230. Break-even units: R8,000 ÷ R230 = 35 cakes per month. About 9 a week. Sell fewer and you’re going backwards. Sell more and the rest is profit.

The mistake almost everyone makes

The most common error is not including your own salary in fixed costs. Founders often think of their time as “free” because they don’t pay themselves a formal wage in the early days. But your time isn’t free — if you could earn R20,000 a month at another job, that’s the real cost of running this business instead. A “break-even” that doesn’t include you is misleading.

Fixed vs variable — getting it right

The split between fixed and variable matters more than the total spend.

Fixed (per month): rent, salaries, insurance, internet, accounting fees, software subscriptions, your own wage.
Variable (per sale): raw materials, packaging, courier fees, card-machine fees, marketplace commissions, transaction fees.

When in doubt: ask “does this cost change when I sell more this month?” If yes, it’s variable. If no, it’s fixed.

Using break-even to make decisions

Once you know your break-even, you have a tool for almost every business decision.

Considering a price drop? Lower selling price means higher break-even units. Check the new number before you discount — sometimes the maths just doesn’t work.
Thinking of renting a shop? Add the rent to fixed costs and recalculate. If break-even doubles, you need to be confident sales will too.
Hiring your first employee? Their salary is a fixed cost. Calculate the new break-even before signing the contract — and what your sales target must be the month they start.

Frequently asked questions

What is the break-even point?
Your break-even point is the level of sales at which you cover all your costs — fixed and variable — but make zero profit. Any sale above that point starts adding to profit. Below it, you're losing money.
What's the difference between fixed and variable costs?
Fixed costs stay the same regardless of how much you sell — rent, salaries, insurance, internet, accounting fees. Variable costs change with every sale — raw materials, packaging, courier fees, card-machine fees. Get this split right or your break-even number will be wrong.
What is contribution margin?
Contribution margin is what's left from each sale after you pay the variable cost. If you sell something for R250 and it cost R100 to make, your contribution margin is R150 — that R150 goes towards covering your fixed costs (rent, salaries, etc). Once enough sales have contributed enough Rands to cover all fixed costs, you've broken even.
Why does my contribution margin matter more than my price?
Two products at the same R250 price can have wildly different contribution margins. One with R100 variable cost contributes R150 to fixed costs. One with R200 variable cost only contributes R50. The first lets you break even with one-third the sales of the second. Contribution margin — not headline price — drives how viable a product is.
Should I include my own salary in fixed costs?
Yes — if you want a realistic number. Many owners leave themselves out so the business looks like it breaks even, when really it's only breaking even because they're working for free. Include a fair monthly wage for yourself. That's the real break-even number.
How do I lower my break-even point?
Three levers: (1) raise the selling price, (2) reduce variable cost per unit (cheaper suppliers, better packaging), or (3) cut fixed costs (move to a cheaper space, share an office, drop subscriptions you don't use). Even small changes compound — dropping fixed costs by R5,000 a month can drop your break-even by dozens of units.
What if I sell multiple different products?
Use a weighted average contribution margin. Add up the contribution margin across all products you expect to sell, divided by the number of units. For a v1 estimate, pick your most representative product and use those numbers — it's not perfect but it's directionally correct.
Is break-even the same as profitable?
No. Break-even just means you covered costs. Profitable means you covered costs and have money left over. Once you know your break-even, set a target above it — that surplus is your profit and your safety margin.
Does VAT affect break-even?
If you're VAT-registered, the 15% you collect is SARS's money, not yours. Calculate break-even using VAT-exclusive prices and VAT-exclusive variable costs. If you're not VAT-registered, use the prices as-is.
Is my data saved anywhere?
No. Every calculation runs entirely in your browser. We never see your numbers and nothing is stored on a server.

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