Metrics
What is break-even and how do I calculate it?
Break-even sales volume shows how many transactions cover fixed costs. Step through contribution margin, monthly targets, and limits of break-even analysis.
Educational overview only—not investment, legal, tax, or lending advice. CPS does not provide funding; independent providers make their own decisions.
Contribution per sale
Contribution per sale equals selling price minus variable costs directly tied to each sale (materials, fulfillment, payment fees, commissions). It shows how much each sale contributes toward fixed operating expenses.
Break-even volume formula
Break-even sales volume ≈ fixed operating expenses ÷ contribution per sale. Break-even revenue is that volume multiplied by average selling price.
Daily targets divide monthly break-even by operating days. This is an operating benchmark, not a guarantee of positive cash flow.
What break-even does not capture
Taxes, debt service, owner draws, inventory prepayments, and customer payment delays can require additional cash beyond break-even sales. Use break-even alongside cash timing analysis.