Understanding your breakeven point is essential. It tells you how much money you need to make just to stay in business — and helps you set realistic revenue targets.
What Is the Breakeven Point?
The breakeven point is the level of revenue at which your total income exactly covers your total costs — both fixed and variable. Below this point, you’re making a loss. Above it, you’re in profit.
The Formula
Breakeven Point = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit)
A Simple Example
- Fixed costs (rent, salaries, insurance, software): $10,000/month
- Average selling price per unit/job: $500
- Variable cost per unit/job: $200
- Contribution margin: $500 − $200 = $300
- Breakeven: $10,000 ÷ $300 = 34 units/jobs per month
Why It Matters
- Sets a clear minimum revenue target
- Helps you price products and services correctly
- Informs decisions about hiring, expansion and investment
- Shows lenders and investors you understand your numbers
Need help calculating your breakeven? Our team can help you build a clear financial picture of your business.