Every business owner should know their break-even point. It’s the number that tells you how much you need to sell before you start making a profit. Once you pass it, every sale adds directly to your bottom line.
A Simple Break-Even Example for Service-Based Businesses
Imagine you run a consulting business.
- Your fixed costs like rent, software, and insurance are $4,000 per month.
- You charge $200 per session.
- Your variable costs such as materials, travel, or admin support are $50 per session.
Here’s the formula:
Break-Even Point = Fixed Costs ÷ (Sales Price – Variable Costs)
4,000 ÷ (200 – 50) = 26.6
That means you need to deliver 27 sessions per month to break even. Anything above that is profit.
Why does this matter? Because when you know your break-even point, you can:
- Price your services with confidence, knowing you’re covering costs.
- Set realistic sales goals that actually align with your expenses.
- Decide when it’s the right time to expand, hire, or invest in new tools.
Your break-even point isn’t just a number, it’s a tool that gives you clarity and control over your business.
Of course, to get the most out of this, you’ll need accurate numbers. That’s where we come in, we make sure your bookkeeping is clear and reliable so you can make the right decisions going forward. Schedule a call to learn more!