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Franchise · Planning

Break-Even Sales

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Use break-even sales to find the revenue you must hit before fixed costs are covered, using your contribution margin as the share of each dollar left after variable costs.

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Interactive workbench

Shop break-even

Fixed CostsContribution Margin%100

$15,000 of fixed costs at a 60% contribution margin needs $25,000 in sales to break even.

Step 1 of 3

Variables and units

  • Fixed Costs

    Total fixed costs for the period.

    currency

  • Contribution Margin

    Share of each sales dollar left after variable costs.

    percent

Common mistakes

  • Confusing contribution margin with profit margin.
  • Leaving rent or salaries out of fixed costs.

Step-by-step example

Shop break-even

  1. 1. Start with the example inputs

    • Fixed Costs$15,000
    • Contribution Margin60%

  2. 2. Apply the formula

    Fixed CostsContribution Margin%100

  3. 3. Run the numbers

    $25,000.00

    $15,000 of fixed costs at a 60% contribution margin needs $25,000 in sales to break even.

What this result means

You need $25,000.00 in sales for contribution margin to cover fixed costs; beyond it, each additional sale adds profit. Translate it into a daily or weekly figure — break-even per day is the number a shop can actually manage against.