Operating Cost & Break-Even Calculator
Calculate the exact number of units or hours required to cover fixed and variable business costs. Essential for freelancers and small business financial planning.
Costs & Price
Analysis
About
Small business owners and freelancers use break-even analysis to determine the safety margin of a venture. This point represents the precise sales volume where total revenue equals total costs, resulting in zero profit and zero loss. Understanding this metric allows entrepreneurs to set realistic pricing strategies and sales targets. Fixed costs like rent and software subscriptions remain constant regardless of output. Variable costs such as labor and materials fluctuate with production volume. Miscalculating either category leads to cash flow gaps that jeopardize operational sustainability.
Formulas
The core logic divides the total fixed overhead by the contribution margin per unit. The contribution margin represents the portion of sales revenue available to cover fixed costs.
To calculate the break-even point in terms of revenue currency:
Reference Data
| Cost Type | Definition | Examples | Impact on Break-Even |
|---|---|---|---|
| Fixed Costs (FC) | Independent of output | Rent, Insurance, Salaries | Increases BEP directly |
| Variable Costs (VC) | Per unit produced | Materials, Commissions | Reduces margin per unit |
| Contribution Margin | Price − VC | Net from single sale | Higher margin lowers BEP |
| Break-Even Point | FC ÷ Margin | Units needed to survive | N/A |
| Profit Zone | Sales > BEP | Net Income Generation | N/A |