Break-even calculator
Sales needed each month
–
An estimate to help you plan, not an offer or approval. Lenders set their own policies, costs and limits.
Quick answer
This break-even calculator uses three numbers: your fixed costs per month, your average sale price and the variable cost of each sale. It shows how many sales you need each month to break even, the revenue that represents, the contribution each sale makes and your contribution margin as a percentage. Add a proposed loan repayment to fixed costs to see how many extra sales the loan must generate.
Key points
- Break-even sales = fixed costs ÷ (price − variable cost), rounded up to a whole sale
- Contribution margin shows how much of each sales dollar is left to cover overheads
- Adding a loan repayment to fixed costs reveals the extra sales it has to earn
- Use prices and costs excluding GST, or the answer will be off by about a tenth
How many coffees, haircuts, service calls or orders does the business need before it stops losing money each month? That’s your break-even point, and business.gov.au describes it simply as the point where income equals expenses. Knowing it turns vague worry into a number you can track, and it’s the quickest way to test whether a loan will pay for itself.
Sorting your costs before you start
The calculator only asks for three figures, but the answer is only as good as how you split your costs. Use this as a guide:
| Usually fixed (per month) | Usually variable (per sale) |
|---|---|
| Rent and outgoings | Stock or ingredients |
| Core wages and super | Packaging and freight |
| Insurance, software, phone | Card and platform fees |
| Accountant and bookkeeper | Sales commissions |
| Vehicle and equipment repayments | Subcontractor costs per job |
| Existing loan repayments | Consumables used per job |
Then enter:
- Fixed costs per month. The total of the left column for a typical month.
- Average sale price. Your average transaction, excluding GST. For a trade business, the average job; for retail, the average basket.
- Variable cost per sale. The right column, worked out per sale.
What the results are telling you
Sales needed each month. Fixed costs divided by the contribution per sale, rounded up to the next whole sale. You can’t make 0.4 of a sale, so the calculator doesn’t pretend you can.
Revenue to break even. That number of sales multiplied by your average price. Because of the rounding up, it can sit a little above the exact theoretical figure.
Contribution per sale. Price minus variable cost: the dollars each sale puts towards rent, wages and repayments.
Contribution margin. The same thing as a percentage of the price. A 60% margin means 60 cents of every sales dollar goes to overheads and profit. Lower-margin businesses need far more volume to cover the same rent.
If the variable cost is equal to or more than the price, the calculator shows “Price is below cost” and stops, because every extra sale would deepen the loss.
A suburban café, step by step
A café owner works through last quarter’s figures.
- Fixed costs: $32,000 a month (rent, core staff, insurance, utilities, POS subscription)
- Average sale: $18 excluding GST
- Variable cost: $6.30 per sale (coffee, milk, food, cups, card fees)
The calculator returns:
- Contribution per sale: $11.70
- Contribution margin: 65.0%
- Sales needed: 2,736 a month
- Revenue to break even: $49,248
Over a 30-day month that’s about 92 transactions a day just to stand still. The owner knows the café averages around 120, so there’s a cushion of roughly 28 sales a day.
The loan test: how many extra sales does a repayment need?
This is where the calculator earns its keep for borrowers. The café is looking at an equipment finance deal for a new espresso machine and grinder. The quoted repayment is $2,400 a month.
Add $2,400 to fixed costs, making $34,400, and run it again:
- Sales needed rises to 2,941 a month, an extra 205 sales
- Spread across 30 days, that’s about seven more customers a day
Now the question is concrete. Will a faster machine and better coffee bring in seven more customers a day, or let the café serve the morning rush without losing people out the door? If yes, the loan pays its way. If it’s a stretch, a smaller machine or longer term might fit better. Our repayment calculator shows what different terms do to the monthly figure.
Thinking about borrowing for growth? Share your numbers with us and you’ll speak with someone who reads them properly.
Three levers that move break-even
Run these one at a time to see which matters most for your business:
- Price. Lift the café’s average sale from $18 to $19 and break-even falls from 2,736 to 2,520 sales a month. A dollar on the price did more than most cost-cutting would. The margin and markup calculator helps set prices with this in mind.
- Variable cost. Renegotiating milk or packaging by 30 cents a sale lifts contribution, and the saving applies to every single transaction.
- Fixed cost. Rent and core wages are hard to move quickly, which is why it’s worth testing a loan repayment before you commit to one.
Accounting break-even vs cash break-even
Your accountant’s profit and loss treats a loan differently from your bank account. Only the interest part of a repayment is an expense in the P&L; the principal reduces the debt. Depreciation, meanwhile, is an expense that doesn’t cost cash this month.
For a cash survival view, which is what most owners and lenders care about week to week, put the whole loan repayment into fixed costs and leave depreciation out. For an accounting view, use the figures from your P&L. If the two answers are far apart, the business may be profitable on paper while still feeling tight in the bank. A cash runway calculation helps there.
Where it falls short
The calculator assumes one average price and one average variable cost. A business selling a mix of high and low margin products should weight its averages to reflect the real sales mix, or run each product line separately. It also treats every month the same, so seasonal businesses should run a busy month and a quiet month and plan around the quiet one.
Related tools
- Margin and markup calculator: convert between markup and margin and price with confidence.
- Debt service coverage ratio calculator: how lenders test whether profit covers repayments.
- Cash runway calculator: how many months your cash lasts at the current burn.
When the extra sales are within reach
If the numbers show a loan repayment can be covered by a realistic lift in sales, you’re already thinking the way a good lender does. Banks are usually the cheapest place to start when your financials are clean. If they’ve said no, or you need it sooner than they can move, there are other lenders who’ll weigh the same numbers.
Our enquiry is short: a minute or so of your time. You can complete it without any hit to your credit file. Your details go to us and stay with us, not to a long list of lenders competing for your phone number. A specialist reads it and calls you for a proper conversation. Please give us accurate turnover and repayment figures, the same ones you used above, because that’s how we get the match right on the first go.
Frequently asked questions
What counts as a fixed cost?
Anything you pay each month whether you make one sale or a thousand: rent, salaried wages, insurance, software, accounting fees, vehicle leases and loan repayments. Costs that rise with every sale, like stock, packaging, card fees and sales commissions, are variable.
What if my wages go up and down with sales?
Split them. The core roster you need just to open the doors is fixed. Extra casual shifts you add when it's busy behave more like a variable cost, so estimate the wage cost per sale on a busy day and add it to the variable cost.
Why does the calculator say 'Price is below cost'?
Because your variable cost per sale is equal to or higher than your price. Each sale loses money before rent and wages are even counted, so no volume of sales can ever break even. Lift the price or cut the cost per sale first.
Should I include GST in the price?
No. If you're registered for GST, the tax you collect belongs to the ATO, so use prices and costs excluding GST. Including it would overstate your contribution and understate the sales you really need.
Do lenders care about my break-even point?
Indirectly, yes. Lenders want to see that repayments fit comfortably within what the business earns. Showing that you trade well above break-even, even after adding the new repayment, is one of the clearest ways to make that case.