Break-Even Calculator
Calculate the revenue and number of sales needed to cover costs and reach your profit target.
Costs and sales
Use one unit of activity, such as one completed sale or settlement.
Your break-even estimate
Example inputsCorrect the marked fields to calculate your estimate.
- $24,000
- Before tax, for the selected period. Whole-unit targets appear below.
- 6
- $3,000.00
- 75%
- $6,000
- $34,667
- 9
Revenue is a continuous threshold. Whole-unit targets round up to cover the required amount.
Activity and target breakdown
Per month
| Revenue at entered activity | $32,000 |
|---|---|
| Variable costs at entered activity | $8,000 |
| Total costs at entered activity | $26,000 |
| Additional units for profit target | 1 |
| Revenue at whole-unit profit target | $36,000 |
| Profit at whole-unit target | $9,000 |
Fixed Costs and Contribution Margin
Contribution margin is the revenue left after the variable costs of a sale. That contribution pays fixed overheads first; the amount left after overheads is operating profit before tax.
Fixed costs stay the same over the period and activity range you are testing. For a brokerage, they can include premises and salaries. Variable costs rise with activity, such as a per-settlement processing charge or a commission split. Put each cost in one category so you deduct it once.
Choose either variable cost per unit or the percentage of revenue retained after all variable costs. A 75% retained contribution means $750 of every $1,000 of revenue is available for fixed costs and profit. Calculate the percentage after all per-settlement costs, including deductions outside a commission split.
Finding Break-Even Revenue or Volume
Divide fixed costs by contribution per unit to find break-even volume, or by the contribution margin expressed as a decimal to find break-even revenue. These are the break-even formulas explained by Business Victoria.
The calculator rounds a unit target up because a fraction of a completed sale cannot cover the full cost. The revenue threshold keeps the unrounded unit calculation, so the revenue from the whole-unit target can be higher.
With positive fixed costs, a zero or negative contribution has no finite break-even volume. More sales cannot pay those overheads unless price rises or variable cost falls. If fixed costs are zero, zero sales already breaks even, even with a non-positive contribution; a positive profit target still needs a positive contribution.
A Brokerage Cost Scenario
The starting inputs are a hypothetical monthly brokerage budget. Each settlement earns $4,000 in commission revenue and has $1,000 of variable deductions and costs. That leaves $3,000 per settlement, or a 75% contribution margin, to cover $18,000 of monthly fixed costs.
| Monthly scenario | Amount |
|---|---|
| Fixed costs | $18,000 |
| Revenue per settlement | $4,000 |
| Variable cost per settlement | $1,000 |
| Contribution per settlement | $3,000 |
| Break-even revenue | $24,000 |
| Profit at eight settlements | $6,000 |
Six settlements cover the fixed costs exactly. At eight settlements, revenue is $32,000 and variable costs are $8,000. Subtracting the $18,000 overhead leaves $6,000 before tax.
Settled loan volume is the amount borrowers receive, not the brokerage's commission revenue. Use commission after variable deductions as the contribution basis. Payment delays and potential commission clawbacks need a separate cash-flow forecast and reserve; this calculation does not predict either.
Adding a Profit Target
Add your desired profit to fixed costs before dividing by the contribution margin. Business Queensland uses this method for minimum sales needed to meet a profit goal. Include an owner's salary in fixed costs if the target is profit after that salary.
In the monthly example, an $8,000 profit target needs $26,000 of contribution. The continuous revenue target displays as $34,667. Rounding up to nine settlements produces $36,000 of revenue and $9,000 of profit. That is one more settlement than the entered activity of eight.
Change fixed costs to test a new overhead, or change revenue per unit and retained contribution to test a different commission arrangement. Keep all period totals on the same basis. Selecting Yearly changes the period label only, so enter annual costs, annual activity and an annual profit target together.