Costs that exist before sales.
Software, rent, insurance, tools, salaries, hosting, subscriptions, accounting, and admin.
Business Guide
Break-even is the first truth test for a business.
If the numbers cannot cover fixed costs, the idea needs a better price, lower costs, stronger demand, or a different model.
Core Formula
Break-even = fixed costs divided by profit per sale.
Simple formula, serious implications.
Costs tied to each sale.
Payment fees, delivery, materials, contractor time, customer support, refunds, and transaction costs.
Profit per sale matters.
A low-margin offer needs much more volume than a high-margin offer.
Cash flow decides survival.
Break-even on paper is weaker than cash collected on time.
Example
A small example makes the model clear.
Example only
If fixed costs are GBP 1,000 per month and profit per sale is GBP 50, the business needs 20 sales per month to break even. If profit per sale falls to GBP 20, it needs 50 sales. Pricing and margin change the entire operating pressure.
Next Routes
Use the number to improve the model.
Use the planning calculators to test sales targets.
Open calculatorTest whether customers will pay before building too much.
Open validation guideConnect business risk to personal finance stability.
Open literacy hubThis is educational and does not replace accounting, tax, legal, or business advice.
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