Break-even point explained: how many sales you need before you make a profit
By SendPay Business · · 2 min read
- 1Type in your own numbers
- 2The tool works it out
- 3See the answer clearly
Your break-even point is the number of sales that covers all your costs. Below it you're losing money; above it, every sale is profit. It's the most useful number a small business can know.
The sum
Break-even sales = fixed costs ÷ (price − cost per sale).
Fixed costs are what you pay whether you sell or not: rent, software, insurance, your own wage. Cost per sale is what each sale costs you: materials, postage, packaging and the card fee.
A worked example
You sell a product for £40. Materials and postage cost £15, and the card fee is about 60p, so each sale leaves £24.40. Your fixed costs are £2,000 a month.
£2,000 ÷ £24.40 = 82 sales a month to break even, or about three a day.
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Three ways to break even sooner
Every one of these lowers the number of sales you need.
- Raise the price a little. All of the increase goes straight to each sale's contribution.
- Cut the cost per sale: cheaper postage, bulk materials, lower card fees.
- Trim fixed costs you don't need, like unused subscriptions.
Check it every few months
Costs change, and so should your sums. Re-run the numbers whenever a supplier, your rent or your prices change.
How it works
Your own money app- 1Name it and pick your colours
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- 3Launch when you are ready
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SendPay Business is a technology company, not a bank. Accounts, cards and payments are powered by licensed partners.
Questions people ask
Is there a calculator for this?
Yes. The free break-even calculator does the sum from your own numbers, including card fees.
Open the break-even calculator →Should my own wage count as a fixed cost?
Yes, if you want the business to pay you. Otherwise breaking even just means you're working for free.
What's the difference between break-even and profit margin?
Break-even tells you how many sales cover your costs. Profit margin tells you how much of each sale's price is profit.
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Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.