Break Even Calculator

Break-even point formulas, with Excel and Google Sheets versions

Each result above comes from one of these formulas. The examples use the calculator's default numbers, which are illustrative.

B1 is fixed costs for the period, B2 the price per unit, B3 the variable cost per unit, B4 expected units and B5 the target profit. C1 is monthly fixed costs, C2 revenue per customer per month and C3 variable cost per customer per month. D1 is CAC. ROUNDUP gives whole units, because you cannot sell two thirds of a seat. Excel has no break-even function, but Goal Seek (Data, What-If Analysis) can find the volume that sets a profit cell to zero.

How to calculate your break-even point, step by step

1. Pick one period. A month for a subscription business, a month or a year for a product. The SBA's guide suggests working in monthly figures and turning quarterly or annual bills into monthly amounts.
2. Split your costs. Fixed costs stay the same when volume moves: salaries, rent, software, insurance. Variable costs rise with each unit or customer. ORM's guide to fixed vs variable costs walks through the gray areas, such as costs that are fixed up to a point and then step up.
3. Work out contribution per unit. Price minus variable cost. This is what each sale leaves to pay fixed costs. The contribution margin entry shows how it differs from gross margin.
4. Divide. Fixed costs divided by contribution per unit is the break-even volume. Divided by the contribution margin ratio, it is break-even sales.
5. Compare with your plan. Expected sales minus break-even sales, as a share of expected sales, is your margin of safety.
6. Stress it. Move price and fixed costs up and down, as the sensitivity table does, before you rely on one number.

Break-even for a SaaS company: customers, MRR and payback

A software company does not sell units in the usual sense. It sells subscriptions that bill every month or year. So the useful break-even question is how many customers, or how much MRR, covers the monthly cost base. Revenue per customer minus the cost to serve that customer is the contribution per customer. Hosting, support that grows with accounts and payment fees are variable. Engineering, finance, rent and most of the sales team are fixed in the short run.

Two numbers matter, and most break-even pages give only the first.

• Break-even with growth spend. Divide all monthly fixed costs, including sales and marketing aimed at new customers, by contribution per customer. This is the customer count at which the P&L shows zero profit while you keep growing at today's pace.
• Steady-state break-even. Take out the spend to win new customers and divide again. This tells you how many customers would cover the business if you stopped acquiring. It is the number that shows whether the base business works.

The third tab answers a different question: when does one new customer break even? That is CAC payback on contribution. Divide CAC by the monthly contribution per customer. With churn, some customers leave before they pay back, so the average customer takes longer. The calculator solves for the month when cumulative expected contribution equals CAC, and tells you when it never does. ORM's CAC payback period entry covers the variants.

Worked example: an illustrative SaaS company at 220 customers

These are the second and third tabs' defaults. The company spends $400,000 a month on fixed costs, $120,000 of it on winning new customers. Each customer pays $2,000 a month and costs $400 a month to serve, so each contributes $1,600, an 80% contribution margin ratio.

The company loses $48,000 a month at 220 customers. Its margin of safety is negative, -13.6%, because it sits 30 customers below break-even. But at 175 customers it would cover its costs without growth spend, so the base business works and the loss is the cost of growing. That is a different conversation with a board than a company whose steady-state break-even is above its current count. To turn the monthly loss into months of cash left, use the burn rate calculator; the P&L loss and cash burn differ when customers prepay annually.

The sensitivity table shows why price matters more than it looks. A 10% price cut, from $2,000 to $1,800, cuts contribution from $1,600 to $1,400, a 12.5% drop, and break-even rises from 250 to 286 customers. A 10% rise in fixed costs moves it to 275. Every percent off the price comes straight out of contribution, so the effect is larger than the discount.

Variable cost stays at $400 in every cell. Because fixed costs are a large share of a software company's costs, profit swings faster than revenue on either side of break-even. ORM's entry on how fixed costs magnify profit swings shows the math with public-company filings.

What good looks like: SaaS benchmarks for the inputs

There is no good break-even point in general. It depends on your cost base. But two inputs have public benchmarks you can test yours against.

• Contribution margin ratio. Gross margin is the closest public proxy. Benchmarkit's 2025 B2B SaaS benchmarks report a median gross margin of 81% on subscription revenue and 77% on total revenue, and 30% on professional services. Contribution margin is usually a little lower than gross margin, since it also takes out variable selling and payment costs. A heavy services mix pulls the ratio down and break-even up.
• Payback. The same report notes that "common wisdom often says ~12 months CAC Payback Period is good," and that median CAC payback has risen 12.5% since 2022. At 15 months simple payback, the illustrative company is slower than that rule of thumb. The unit economics entry explains how payback and lifetime value fit together.

The SBA also suggests adding about 10% to estimated costs to cover expenses you did not plan for (SBA break-even point calculator). For an early company with uncertain costs, that cushion is cheap insurance on the number.

What Pete Furseth sees in SaaS pricing and costs

• Use the price you close at, not the list price. Most deals close for less than the value in the CRM, Pete says. His example is a pipeline with an $80,000 average deal size where closed-won deals average $40,000. A break-even built on pipeline prices will be wrong by the same gap.
• Watch for price pressure. When a new competitor enters a market, Pete sees pricing pressure, and average deal size goes down. The sensitivity table shows what that does to break-even.
• Raising price is an option, sometimes. "You can raise your price if the market will bear it," Pete says. He sees it most often when a new private equity owner gets involved.
• A new rep is a fixed cost for a long time. Across B2B SaaS and technology companies, Pete generally sees reps take 15 to 18 months to become fully productive. Each hire raises fixed costs on day one and contribution much later, so break-even moves out before it moves in.
• Show a range. Pete's advice for board forecasts applies here: show a low case, an on-target case and an upper bound, not one number.

Common break-even mistakes

• Putting sales commissions in fixed costs. Commissions grow with each deal. Treat them as variable, or spread them over the contract.
• Treating all sales and marketing as fixed. Show break-even with and without new-customer spend, so growth cost and base cost stay separate.
• Mixing periods. Annual fixed costs with monthly prices give an answer 12 times too high.
• Ignoring churn. A customer count at break-even today needs new logos every month just to stay there.
• Reading break-even as cash break-even. Annual prepayments, collection delays and capitalized costs move cash away from the P&L. Check both.
• Assuming costs stay flat. Many fixed costs step up: a new office, a new support tier, a new engineering team. Re-run the numbers at each step.

This calculator is for planning and analysis. It is not accounting, tax or legal advice, and it ignores taxes, financing costs and the time value of money.

Break-even vs net profit margin

Break-even tells you the volume where profit is zero. Net profit margin tells you how much of each revenue dollar is left once you are past it, after every cost. The two read together: a company with a small margin of safety will also show a thin margin. Once you are above break-even, the net profit margin calculator shows what each dollar of revenue keeps.

ORM's take on break-even and the bookings forecast

The cost side of a break-even is mostly known. Salaries, rent and software are in the budget. The hard part is the other side: how many customers you will have, at what price, and when. That is a bookings and ARR forecast. If the forecast is high, the break-even date in the plan is early, and the hires made against it raise fixed costs before the revenue arrives.

That is what ORM forecasts. We build bookings and ARR forecasts from your own CRM data, with a low case, an on-target case and an upper bound, and with the seasonality of your quarter built in. ORM targets 95% accuracy on the forecasts it builds. To see how a revenue range turns into a P&L and cash runway, try the financial forecast template.

Common questions

How do you calculate break-even?

Add up fixed costs for a period, then divide by contribution margin. In units, that is fixed costs / (price per unit - variable cost per unit). In sales dollars, it is fixed costs / contribution margin ratio. With $600,000 of fixed costs, a $1,200 price and $300 of variable cost, you need 667 units, or $800,000 of sales, to break even.

What is the break-even point formula?

Break-even point in units = fixed costs / (selling price per unit - variable cost per unit). Break-even point in sales dollars = fixed costs / contribution margin ratio, where the ratio is (price - variable cost) / price. To plan for a profit, add the target profit to fixed costs before you divide. For a subscription business, use monthly fixed costs and the contribution per customer per month.

Is 100% ROI breaking even?

No. Break-even is 0% ROI: you got back exactly what you spent. A 100% ROI means the gain equals the cost, so you doubled your money. If you spend $24,000 to win a customer, you break even when that customer has contributed $24,000 after variable costs. A 100% return would take $48,000 of contribution.

Is there a break-even formula in Excel?

Excel has no built-in break-even function, but the formula is one cell. With fixed costs in B1, price in B2 and variable cost in B3, =B1/(B2-B3) gives units and =ROUNDUP(B1/(B2-B3),0) gives whole units. =B1/((B2-B3)/B2) gives sales dollars. Goal Seek, under Data, What-If Analysis, can also find the volume that sets profit to zero.

How many customers does a SaaS company need to break even?

Divide monthly fixed costs by the contribution each customer brings in a month, which is average revenue per account minus the variable cost to serve it. With $400,000 of monthly fixed costs, $2,000 of revenue and $400 of variable cost per customer, you need 250 customers, or $500,000 of MRR. Run it again without new-customer acquisition spend to see steady-state break-even.

What is break-even analysis?

Break-even analysis finds the sales volume where total revenue equals total costs, so profit is zero. It splits costs into fixed and variable, works out how much each sale contributes, and shows how far current or planned sales sit above or below that point. The gap is the margin of safety. It is most useful for pricing, hiring and planning decisions, tested across a range of prices and costs.

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