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GovMath.

Business & Self-Employment · Planning tool

Break-Even Calculator

The minimum sales volume that covers your fixed costs. Below break-even you lose money; above, every extra unit is pure contribution to profit.

£

Rent, salaries, insurance — costs that don’t change with units sold.

£
£

Direct materials, packaging, shipping — costs that scale with each sale.

Break-even units

2,000 units/year

≈ 167/month at £50,000 annual revenue

Breakdown

  • Contribution per unit
    Price − variable cost
    £15
  • Fixed costs to cover
    £30,000
  • Break-even revenue
    £50,000

How we calculated your result

Contribution per unit = price − variable cost. Break-even units = fixed costs ÷ contribution per unit. Break-even revenue = break-even units × price.

Official UK rules in simple English

  • Fixed costs don’t scale with sales (rent, salaries, software).
  • Variable costs scale 1:1 with units (materials, packaging, payment fees).
  • Some costs are semi-variable (e.g. utilities) — judgment call.

Common pitfalls to watch out for

  • ⚠ Your own salary is a fixed cost

    If you’re a sole trader paying yourself £30k, include it. Otherwise the calculator says you’ve broken even when you actually haven’t paid yourself a penny.

  • ⚠ Variable cost < price (or you’re doomed)

    If shipping + materials + payment fees exceed sale price, no volume helps. Fix the unit economics first.

  • ⚠ Break-even ignores growth, taxes, capex

    It’s a survival number — not a target. Aim well above to actually build a business.

Frequently asked questions

What about safety margin?
Industry rule of thumb: aim for actual sales 30–50% above break-even, to give you slack for downturns.
How do I know my fixed vs variable split?
Look at last year’s P&L. Any cost line that didn’t change much month-on-month, regardless of sales, is fixed.

Simple linear model. Real costs often step (e.g. hiring an extra person), and prices vary by channel.

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