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Rent and bills land every month, and you need $ in sales before any of it is yours.
How much do I need to take in each month to cover all my business costs?
To cover all your costs, divide your monthly fixed costs by the share of each sale you keep after paying that sale's own costs. That share is price minus the cost of one sale, divided by price. With fixed costs of 2,000, a price of 50 and a cost of 20 per sale, you keep 60% of every sale, so you need about 3,333.33 in sales each month to break even.
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Change any number below: the result updates while you type.
Sell less than this in a month and the month ends in a loss.
The maths is done. Now Oravio can tell you what to do with it.
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Continue with my numbers Free · no card · 20 messages a dayHow it is calculated
- Add up your fixed costs for one month: rent, insurance, software, and wages that do not change with sales.
- Work out what one sale costs you: materials, packaging, and any pay that goes up with each sale.
- Take the price of one sale and subtract its cost. What is left goes toward your fixed costs.
- Divide what is left by the price. This gives the share of each sale you keep.
- Divide your monthly fixed costs by that share. The answer is the sales you need to break even.
- To see how many sales that is, divide your fixed costs by what is left from each sale.
- Sales needed each month = Monthly fixed costs ÷ ((Price of one sale - Cost of one sale) ÷ Price of one sale)
- Left from each sale = Price of one sale - Cost of one sale
- Share of each sale you keep = (Price of one sale - Cost of one sale) ÷ Price of one sale × 100
- Number of sales needed each month = Monthly fixed costs ÷ (Price of one sale - Cost of one sale)
An example
Monthly fixed costs: 2,000 $ · Price of one sale: 50 $ · Cost of one sale: 20 $.
Result: Sales needed each month: 3,333.33 $ · Left from each sale: 30.00 $ · Share of each sale you keep: 60.0 % · Number of sales needed each month: 66.7 sales.
Worth keeping in mind
- Breaking even means no loss and no profit. Any profit only starts above this amount.
- If you sell many items at different prices, use your average price and your average cost per sale.
- Include your own pay in fixed costs if you want the business to cover it too.
- Enter prices and costs the same way, either both with sales tax or both without it.
- If the price is not higher than the cost of one sale, you can never break even at that price.
Sources
Text drafted with the assistance of artificial intelligence, from the sources listed, and checked against the worked example. It is a tool for orientation: for tax or contractual decisions, your accountant has the last word.
How this page came about
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- It looked for the sources and opened them one by one: the ones that do not answer never get in.
- It wrote the formulas and tried them on a worked example: if the maths does not add up, the page never goes out.
- It laid the page out and put it online all by itself, with nobody touching a key.
It is the same work it does for the people who use it: you say what you need in plain words, and it gets done while you are doing something else. A page like this one, on your own numbers, included.
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