Business
The break even calculator: the day the business stops losing
The break-even point is where revenue covers all costs — fixed and variable — and every dollar after is profit. Most founders only discover theirs months in, after the cash has already answered the question. A calculator answers it on day one.
- Fixed vs variable
Break-even splits costs into what stays and what scales.
- The date arrives
Units to break even ÷ units per month = the calendar date.
- The contribution
Price minus variable cost is what each sale contributes to fixed costs.
- Runway link
Break-even date versus runway date tells you if you survive the gap.
The calculation
| Line | Example |
|---|---|
| Fixed costs (rent, payroll, software) | $8,000/mo |
| Price per unit | $100 |
| Variable cost per unit | $40 |
| Contribution per unit | $60 |
| Break-even units | 8,000 ÷ 60 = 134 units/mo |
Interpreting the answer
- 134 units a month is the floor — below it, the business burns cash.
- Compare to realistic sales: if the plan says 80 units, the model is not viable yet.
- The levers: raise price, cut variable cost, or trim fixed cost.
The dated view
Convert break-even to a date: units per month projected on a calendar gives the month the curve crosses zero.
Stack that date against the runway — the month you run out of cash. If break-even comes after runway ends, the plan needs another lever before it needs more hope.
Frequently asked questions
How do you calculate the break-even point?
Divide fixed costs by the contribution per unit (price minus variable cost). The result is the units you must sell to cover everything.
What is a good break-even point?
One you can realistically exceed with your sales plan — and ideally a date that comes before you run out of cash.
Can break-even be too high?
Yes. If break-even units exceed realistic demand, the model needs a price or cost change before launch, not after.
How does break-even relate to runway?
Runway is how long the cash lasts; break-even is when the business stops needing cash. The gap between the two dates is the funding need.
Know the day the losses stop
Free dated modeling for founders.