How to Calculate Your Break-Even Point (and Cash Runway)
Your break-even point is your fixed monthly costs divided by the profit you keep on each sale — the number of sales you need just to cover costs. Pair it with your cash runway (how many months your cash lasts at your current burn) and you'll know two things every owner should: how many sales it takes to stop losing money, and how long you have to get there.
The break-even formula
Break-even is refreshingly simple: fixed monthly costs ÷ profit per sale = sales needed to break even. If your fixed costs are $2,000/month and you keep $20 of profit on each sale, you need 100 sales a month to cover costs. Every sale after that is profit; every sale short of it is a loss you're funding from savings.
Fixed vs. variable, and contribution margin
To use the formula you have to split your costs. Fixed costs happen every month regardless of sales — rent, software, subscriptions. Variable costs happen per sale — materials, fees, shipping. Your contribution margin is price minus variable cost per unit: the profit each sale contributes toward covering the fixed costs. That contribution margin is the 'profit per sale' in the break-even formula.
Cash runway: how long you have
Break-even tells you the target; runway tells you the clock. Runway is your cash on hand divided by your monthly burn (the cash you spend beyond what you bring in). A business that needs 100 sales/month to break even but only has three months of runway has to get there fast — or cut costs. Look at runway both with and without paying yourself a salary, because those are two very different timelines.
Break-Even, Runway & Profit Calculator
Enter your costs, price, and cash — see how many sales cover your costs, how long your cash lasts with and without a salary, and the month you turn a profit.
Open the free calculator →The month you turn a profit
Put break-even and a realistic sales ramp together and you get the most useful number of all: the month your cumulative profit finally passes what you've spent. That's when the business stops draining money and starts building it — the milestone every plan should be pointed at.
Common mistakes
- Forgetting fixed costs, so break-even looks lower than it is.
- Not paying yourself, which hides the real break-even.
- Ignoring runway — profitable-someday doesn't help if the cash runs out first.
The Break-Even, Runway & Profit Calculator (Excel + Google Sheets, $29) adds a 24-month forecast, multiple products, and the month you turn a profit — with a worked example. Get the toolkit →
Frequently asked questions
How do you calculate the break-even point?
Divide your fixed monthly costs by your profit per sale (price minus the variable cost and fees of each sale). The result is how many sales you need each month to cover costs. Sales beyond that are profit.
What is cash runway?
Cash runway is how many months your business can keep operating before it runs out of money, at its current burn rate. It's your cash on hand divided by your monthly net cash burn — and it's worth checking both with and without paying yourself.
How long before a small business is profitable?
It depends on your break-even and how fast sales ramp. The useful milestone is the month your cumulative profit passes your cumulative spending — a forecast that combines your break-even point with a realistic sales ramp shows when that happens.
This guide is general information to help you plan — not accounting or financial advice. Your numbers depend on your own costs, pricing, and sales.