This calculator helps you determine exactly how much revenue your business must generate to cover all fixed costs. It defines the point where your business stops losing money and starts generating profit.
Understanding your break-even point is critical for pricing strategy, business planning, and growth. If your revenue is below this level, your business is operating at a loss. Once you exceed it, every additional sale contributes directly to profit.
This version uses contribution margin percentage, making it ideal for ecommerce businesses, service providers, and companies selling multiple products.
The result shows the minimum revenue required to cover all fixed costs. At this point, your profit is zero.
If your current revenue is below this number, your business is losing money. Once you exceed this threshold, every additional pound contributes directly to profit.
Break-even revenue = Fixed costs ÷ (Contribution margin ÷ 100)
The contribution margin represents how much of each pound of revenue is available to cover fixed costs and profit. A higher margin means you need less revenue to break even.
This is one of the most powerful metrics in business. Small changes in margin can dramatically change your break-even point.
For example, increasing your margin from 40% to 50% reduces your required revenue significantly. This is why pricing, cost control, and product mix are critical levers for profitability.
For ecommerce businesses, this becomes even more important when factoring in platform fees, advertising costs, and VAT.
Example 1:
Fixed £3,000, Margin 50% → Break-even £6,000
Example 2:
Fixed £5,000, Margin 40% → Break-even £12,500
Example 3:
Improving margin reduces break-even significantly.
The revenue required to cover all fixed costs.
It defines your minimum viable revenue level.
Increase margin or reduce costs.