Free Break-Even Analysis Worksheet (Excel Calculator, Fillable PDF, Word)

What is on the page

Fixed costs

Costs that stay the same whether you sell one unit or a thousand: rent, salaries, insurance, loan payments, subscriptions. Use one period consistently (a month is easiest).

Variable cost per unit

What each additional sale costs you: materials, packaging, direct labor paid per unit, payment processing, shipping, commission. If it does not change when you sell one more, it is fixed.

Contribution per unit

Price minus variable cost: what each sale contributes toward fixed costs, and after break-even, toward profit. Contribution margin % is the same thing as a share of price.

Break-even units and sales

Fixed costs divided by contribution per unit gives the units; times price gives the revenue. Below this you lose money; above it, each unit adds its contribution to profit.

Target profit

Add the profit you want to fixed costs and divide again. For a sole proprietor whose pay is not in fixed costs, the target profit is your pay.

Margin of safety

How far expected sales sit above break-even, as a percentage. Under 20% means a modest downturn puts you in loss.

Sales mix and weighted CM

When you sell several things at different margins, break-even depends on the mix. Each product's margin is weighted by its share of revenue; the sum is the average margin the mix earns per dollar of sales.

Billable %

The share of working hours you can actually bill, after admin, marketing, proposals and unpaid revisions. Solo professionals typically manage 50 to 65%; agencies plan on 65 to 75% for delivery staff.

Which worksheet to use

• Single product: one main product or service, or a representative average unit (average ticket in a café, average job for a cleaner). Fastest way to a number.
• Multi-product: several lines with different margins. Shows how the mix moves break-even and which products carry the business.
• Service hours: anyone who sells time. Builds owner pay into fixed costs, so "break-even" means a real salary, and checks the answer against the hours you can honestly bill.

Break-even in plain terms

Every sale brings in its price and takes out its variable cost; what is left is the contribution. Fixed costs are the pile that contributions have to fill before anything is profit. Break-even is when the pile is full. A bakery with $8,500 of monthly fixed costs and a loaf that sells for $9.50 and costs $2.85 to make contributes $6.65 per loaf; $8,500 ÷ $6.65 is about 1,278 loaves a month, or roughly 43 a day over 30 days. Every loaf after that is $6.65 of profit. Change any input and the answer moves: a 50-cent price rise drops break-even by about 90 loaves; a $400 rent increase adds 60.

The formula assumes costs behave linearly and the mix stays constant which is roughly true over the range a small business operates in. It's a planning tool, not an accounting one: use it to test prices, to size a decision (does the new hire pay for herself at 30 more sales a week?), and to know the number that keeps you up at night.

How to fill it in

1. Pick a period; a month is usual. List every fixed cost for it. Include a realistic owner salary if you want the result to mean "paid".
2. Work out price and variable cost per unit (or per hour). For a mixed business, estimate each product's share of revenue from last month's sales.
3. Enter expected volume and a target profit. Excel calculates contribution, break-even units and sales, target units and margin of safety.
4. Test changes in the notes box: price up 5%, a cheaper supplier, dropping a low-margin line. Re-enter and compare.
5. Revisit quarterly, or whenever a fixed cost changes.

Common mistakes

• Leaving owner pay out of fixed costs and then being surprised that "break-even" leaves nothing to live on.
• Treating semi-variable costs (utilities, hourly staff) as fully fixed or fully variable; split them.
• Forgetting payment processing fees, shipping and returns in variable cost; at 3 to 5% they move the answer.
• Using list price when the real average price after discounts is lower.
• Comparing a monthly break-even with annual expected sales. Keep the period consistent.

Editing the Excel versions

In Excel the contribution, margins, break-even units and revenue, target units, margin of safety and (on the mix sheet) the weighted average margin and per-product units are all formulas. Change a price or a cost and watch the break-even move; that's the point of the sheet. Add rows inside the fixed-cost table and the total follows. Use the P&L for the fixed-cost figures, and the quote or estimate templates once you know the price that works.

Questions

What is the break-even formula?

Break-even units = fixed costs ÷ (selling price per unit − variable cost per unit). Break-even revenue = break-even units × price, or fixed costs ÷ contribution margin %. To include a profit target, add it to fixed costs before dividing.

Is my own salary a fixed cost?

Treat it as one if you want break-even to mean "the business pays me". Many solo businesses leave it out and then call the target profit their pay; either works as long as you know which you did. The service version builds it in.

What is a good contribution margin?

Depends on the business: retail 30 to 50%, restaurants 65 to 75% on food (before labor), services 60 to 90%. More useful than the benchmark is the trend: a falling margin means costs are rising faster than prices.

How do I find variable cost per unit?

Total the costs that scale with sales over a period (materials, packaging, direct hourly labor, processing fees, shipping) and divide by units sold. For services, variable cost per hour is usually small: software per client, travel, subcontracted help.

Why does the multi-product sheet need the sales mix?

Because break-even revenue depends on the average margin you earn per dollar, and that average is set by how much of each product you sell. A shift toward low-margin items raises break-even even if total sales are unchanged.