For every small business owner, understanding your break-even point is essential. It's the number that shows how much you need to sell before you start making a profit. Once you cross that line, every additional sale contributes directly to your bottom line.
A Simple Example of Break-Even for Services
Let's look at a consulting business to make this clear.
- Fixed costs (rent, software, insurance): $4,000 per month
- Price per session: $200
- Variable costs (materials, travel, admin support): $50 per session
The formula is:
Break-Even Point = Fixed Costs ÷ (Sales Price – Variable Costs)
4,000 ÷ (200 – 50) = 26.6
This means you need to deliver 27 sessions per month just to break even. Anything above that is profit.
Why Your Break-Even Point Matters
Knowing your break-even point gives you clarity and helps you make better business decisions:
- ✅ Price with confidence – ensuring your fees cover all costs
- ✅ Set realistic sales targets that align with your overheads
- ✅ Plan ahead for growth – identify when it's time to expand, hire, or invest in new tools
For small business owners, this isn't just a number. It's a financial planning tool that gives you control over your business and a clear view of what success looks like.
Getting Accurate Numbers
Of course, your break-even calculation is only as good as the numbers you put into it. That's why clear, reliable bookkeeping is essential. Accurate financial records allow you to:
- Track fixed and variable costs correctly
- Understand real profit margins
- Make smarter, data-driven business decisions
At CSCG, we ensure your books are accurate and up-to-date so you can calculate your break-even point with confidence and focus on running your business.