Break-even formula
The difference between price and variable cost is the contribution each unit makes towards fixed costs. Once fixed costs are covered, every extra unit adds its contribution to profit. The margin of safety shows how far sales can fall before you make a loss.
Starting a business? Plan your costs, then register your company with us.
Frequently Asked Questions
What counts as a fixed cost?
Costs that do not change with sales volume in the short term, such as rent, salaries, software subscriptions and loan EMIs.
Should GST be included in the selling price?
No. Use prices and costs excluding GST if you are GST-registered, since GST is passed through.
How can I lower my break-even point?
Raise prices, cut variable costs per unit or reduce fixed costs.
This calculator gives an estimate based on the rules shown above. Rates and limits change through budgets and notifications – confirm with a professional before you file or pay.