Free tool
Break-Even Point Calculator
The number of sales at which you start making money. Three numbers, and you know how much you need to sell to cover your costs.
The break-even point is the level of activity at which revenue exactly covers costs. You get it by dividing fixed costs by the contribution margin per unit. Below it the business loses money; above it, every additional sale produces profit.
Where your sales cover your costs
- Profit
- Loss
How break-even is calculated
Unit margin = Selling price − Variable cost Break-even units = Fixed costs ÷ Unit margin Break-even revenue = Break-even units × Selling price
With 8,000 € of fixed costs, a 120 € price and a 70 € variable cost, unit margin is 50 €: you need 160 units, or 19,200 € of revenue, to cover costs.
That figure is the ceiling on any advertising budget. Media spend is a cost, so every euro spent on ads pushes the break-even point up: adding 2,000 € of budget moves it from 160 to 200 units. The question is never "can I spend 2,000 €", it is "do those 2,000 € bring the 40 sales that pay for them".
Reading your break-even point as an investment
- Your ad budget is yours to steer. It sits in fixed costs while it runs, and you raise it when a campaign sells, or lower it when it slows down. You are the one who moves the break-even point, day by day.
- Beyond break-even, your advertising builds your brand. Every campaign makes your name known, and a happy customer talks about you to the people around them. The image I keep in mind comes from chemistry, activation energy. A reaction starts when the colliding molecules bring enough energy, then it can keep itself going, like a fire once the match is struck. Brand awareness starts the same way, and word of mouth can then take over.
Frequently asked questions
How do you calculate the break-even point?
Divide fixed costs by unit margin, which is selling price minus variable cost. For 8,000 € of costs, a 120 € price and a 70 € variable cost: 8,000 ÷ 50 = 160 units.
How does advertising budget enter the calculation?
As an extra fixed cost over the period it runs. The break-even point therefore rises with the budget, and the decision is made on the sales that budget brings, not on the budget itself.
Break-even in units or in revenue?
Units when you sell one product at one price, revenue when the catalogue is varied. In the second case, use the average contribution margin rate rather than a per-unit margin.
Does your media budget fit under your break-even?
This is the calculation that links your accounts to your campaigns, and the one most often missing before a budget increase.
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Théo MaupiléFreelance Paid Media
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