Gross profit break-even
Calculate the revenue needed to reach break-even based on your gross margin.
Gross profit break-even
Calculate the revenue needed to reach break-even based on your gross margin.
This is a faster version of the Break-even calculator for when you already know your overall profit margin percentage, rather than working it out per product. It’s especially handy for service businesses or businesses selling lots of different products at different prices.
It can help you answer questions like:
- How much do I need to sell in total to cover my overheads?
- If my margin improves, how much less do I need to sell to break even?
- Is my current sales level actually covering my costs?
What you’ll need to enter:
- Fixed costs — the bills that stay the same regardless of sales, like rent, wages and insurance. (Example: $15,000.)
- Gross margin — the percentage of each sales dollar that’s left after covering the direct cost of what you sold. You’ll usually find this on a recent profit and loss report, or your bookkeeper can confirm it for you. (Example: 40%.)
How it works
We divide your fixed costs by your gross margin percentage to find the total sales figure needed to cover those costs.
What the result tells you
With the example numbers, you’d need about $37,500 in sales to cover $15,000 of fixed costs at a 40% margin. Below that level, your costs aren’t fully covered yet.
A few ways to bring this break-even point down:
- Improve your margin. Even a small increase in your gross margin lowers the sales you need to cover costs. Example: moving from a 40% to a 45% margin reduces the revenue needed to break even without selling a single extra unit.
- Review your fixed costs regularly. Subscriptions, rent, and service contracts tend to creep up over time — an annual review can catch savings you’d otherwise miss.
- Know your number before busy season. If you know you need $37,500 in sales to break even, you can track progress toward that each month rather than finding out at tax time.
- Use it alongside your pricing decisions. Check the Product pricing calculator to see how adjusting prices changes your margin — and therefore this break-even figure.
In short: this gives you one clear target number to aim for each month, instead of guessing whether you’re on track.
Figures and results from these calculators are a general guide only and are not financial or professional advice. Consider getting professional advice, such as from a bookkeeper or accountant, before making decisions based on these results.