How many sales do you need to break even? (Simple worked example)

"Am I making money?" is hard to answer when you only look at your bank balance. The break-even point gives you one clear number: how many sales you need each month before the business starts to earn anything. Here is how to work it out in three steps.

Step 1: Add up your fixed costs per month

Fixed costs are the ones you pay whether you sell anything or not: rent or coworking, software, insurance, accounting, phone, your website. In our example they add up to 1,500 per month.

Step 2: Work out the margin on one sale

Take your price and subtract the costs that come with each single sale: materials, payment fees, shipping, platform fees.

Example: price 49, variable cost 9 per sale.

Margin per sale = 49 - 9 = 40

Step 3: Divide

Break-even sales = fixed costs / margin per sale

1,500 / 40 = 37.5, so you need 38 sales per month.

At 38 sales your revenue is 38 x 49 = 1,862. That covers the fixed costs and leaves a small rest of 20. Every sale after that adds 40 to your profit.

Add a profit target

Break-even only means "no loss". If you also want a profit, add it to the fixed costs.

Example target: 2,000 profit per month.

(1,500 + 2,000) / 40 = 87.5, so 88 sales per month, which is 88 x 49 = 4,312 revenue.

What changes the number most

Price. At 59 instead of 49 (same variable cost), the margin is 50. Break-even drops from 38 to 30 sales, and the profit target from 88 to 70 sales.
Fixed costs. Every 40 you cut from monthly fixed costs saves you one sale.
Variable costs. Cheaper shipping or lower fees raise the margin on every single sale.

Test these changes on paper before you change your prices. A higher price may sell less, so check whether the lower break-even is worth it.

A quick checklist

List all fixed costs for one month.
Write down price and variable cost per sale.
Divide fixed costs by the margin and round up.
Add your profit target and divide again.
Compare with your real sales from last month.

Want the spreadsheet?

If you would rather fill in a few yellow cells than calculate by hand, the Small Business Cashflow & Budget Kit (19 EUR) includes a break-even calculator with profit target, a 12-month cashflow forecast and a budget vs actual sheet. It works in Excel, LibreOffice and Google Sheets.

This guide was written with AI assistance and checked by hand with sample numbers. It is general information, not tax, legal or financial advice.