Break-Even Analysis Template
How many units you must sell before you make anything.
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As at October 14, 2026
| Fixed costs per month | Amount |
|---|---|
| [add fixed costs] | |
| Total fixed costs | $ 0.00 |
| Per unit | Amount |
|---|---|
| Selling price | $ 0.00 |
| Variable cost | $ 0.00 |
| Contribution per unit | $ 0.00 |
The variable cost is at or above the selling price, so every unit sold loses money and there is no break-even point. Either the price has to rise or the unit cost has to fall.
What is a Break-Even Analysis?
A break-even analysis works out how much you have to sell before you stop losing money: fixed costs divided by the contribution each sale makes after its own variable costs. It turns an opinion about pricing into a number you can test. If break-even is 4,000 units a month and your best month has been 1,200, the problem is not the marketing plan.
Anyone pricing a new product or service runs this, and so does anyone writing a business plan, quoting a fixed-price contract, opening a second site, or deciding whether to take on a lease, a machine or a first employee. Lenders and grant bodies commonly ask for it. Established businesses use it in reverse, to work out how far sales can fall before the current cost base stops being affordable, which is the more useful question in a downturn.
The arithmetic is the same everywhere; what counts as a fixed cost is not. Minimum wage rates, employer social security and pension contributions, holiday and sick pay entitlements, notice periods, and property taxes or business rates all change the size and shape of your cost base by country and often by region. Sales tax treatment matters too — whether to model prices inclusive or exclusive of VAT or GST depends on whether you are registered and can recover input tax.
Break-even tells you what you need to sell, never whether anyone will buy at that price. It assumes costs move in a straight line and the sales mix stays constant, both of which break at volume: bulk discounts cut your unit cost, overtime and a second shift raise it, and one more product line changes the blended contribution entirely. It also ignores timing and cash. You can pass break-even on paper and still be unable to pay for the stock needed to get there.
What to put in a Break-Even Analysis
These are the details this template asks for. Anything left blank is marked in red on the preview so you can see what is still missing.
| Field | What goes in it |
|---|---|
| Business name | For example: Barton Supply Co. |
| Your address | For example: Unit 7, Barton Road, Columbus, OH 43212 |
| Fixed costs per month | One per line: Cost | Amount |
| Average price per unit | For example: 96.00 |
| Variable cost per unit | For example: 61.00 |
How to write a Break-Even Analysis
Separate fixed costs from variable costs
Fixed costs continue whether you sell anything or not — rent, salaried staff, insurance, accountancy, software. Variable costs arise only when you make a sale: materials, packaging, delivery, card processing fees, sales commission. Costs that are part of each, such as a phone plan with usage charges or staff on guaranteed hours plus overtime, should be split rather than dropped into whichever column is closer.
Work out contribution per unit
Take the selling price of one unit and subtract every variable cost attached to it. A £40 product with £11 of materials, £3 of packaging and postage and £1.20 in card fees contributes £24.80. That is what each sale gives towards fixed costs. If contribution is negative, no volume fixes it — selling more loses money faster, and the price or the cost has to change first.
Divide fixed costs by contribution
Total fixed costs for the period divided by contribution per unit gives the units you must sell in that period to break even. £12,400 of monthly fixed costs at £24.80 contribution is 500 units a month. Keep the period consistent on both sides, because mixing an annual cost base with a monthly target is a common and expensive slip.
Convert units into revenue and a timescale
Multiply break-even units by the price for break-even revenue, then express it in terms you can check: 500 units a month is roughly 23 a working day, or 17 sales a day at your current average order size. Units are abstract; a daily figure is something a team can hold against reality by Wednesday of the first week.
Test the price and the cost separately
Rerun the calculation with the price 10 per cent lower, then with the main variable cost 10 per cent higher, and see what each does to break-even volume. Price changes usually move it far more, because a price cut comes straight off contribution. Note the margin of safety too — the gap between expected sales and break-even — since that is your room for error.
Common mistakes
- Leaving the owner's own salary or drawings out of fixed costs produces a break-even point the business can technically reach while nobody in it gets paid.
- Putting sales commission or card processing fees in fixed costs understates the variable cost of each sale and reports a break-even volume you will never actually hit.
- Modelling prices inclusive of VAT or GST while registered treats tax you must hand over as contribution, inflating margin on every unit.
- Ignoring stepped costs means the model shows steady profit past a volume where you would have to take a second unit, another vehicle or an extra shift.
- Applying one blended contribution across products with very different margins hides the fact that break-even depends entirely on which of them you actually sell.
Frequently asked questions
How do you calculate the break-even point?
Divide total fixed costs for a period by the contribution per unit, where contribution is the selling price less all variable costs of that unit. The result is the number of units you must sell in that period to cover everything. Multiply by the price for break-even revenue. Keep fixed costs and the target volume on the same period.
What is contribution margin?
The amount each sale contributes towards fixed costs and profit, after its own variable costs. Per unit it is price minus variable cost; as a percentage it is that figure divided by the price. It decides whether volume can ever rescue a business — if contribution is negative, more sales make the position worse rather than better.
Should break-even be measured in units or revenue?
Units for a product business, where each sale is comparable. Revenue for a service or mixed business, where a unit is not a meaningful thing and the sales mix varies. Many people calculate both, since revenue is easier to compare against a target and units are easier for an operations team to act on.
Do I include my own salary in fixed costs?
If you rely on the business to live, yes — a break-even point excluding what you need to take out is not break-even in any practical sense. How the payment is treated for accounts and tax depends on whether you trade as a sole trader, a partnership or a company, and that differs by jurisdiction, so confirm the treatment with your accountant.
What is the margin of safety?
The gap between your expected or actual sales and the break-even point, shown in units, revenue or as a percentage of sales. It measures how far sales can fall before you start losing money. A thin margin of safety means a single lost customer or one quiet month turns a profitable business into a loss-making one.
This page explains general practice and is not legal advice. Requirements differ between countries and, in some cases, between states — check what applies where the document will be used.