Break-even point: the formula every small shop should know in one paragraph.

Break-even point is the revenue level — or the unit count — at which your total revenue equals your total costs for the period. Below it, you are losing money. Above it, every additional euro of contribution drops to EBIT. The formula is straightforward: Break-even units = Fixed costs ÷ (Average selling price − Average variable cost per unit). nouz turns the abstract formula into a daily revenue target you can actually hit before close.

TL;DR

Definition, in shop-owner English

Every sale you make has two cost types attached to it. Variable costs scale with the sale — ingredients, packaging, card fees, the cost of the product itself. Fixed costs do not — rent, insurance, salaries, software subscriptions. Fixed costs are owed whether you serve one customer or one thousand.

Break-even is the point where the contribution from your sales (price minus variable cost) has covered every euro of fixed cost for the period. One euro before break-even, you are still in the red. One euro after, you are in the black. The metric is not a target — it is a floor. Everything above break-even is the actual business.

You can express it in units (how many haircuts, coffees, or jumpers must I sell?) or in revenue (how much money has to come through the till?). Both answer the same question from different angles.

The formula and a worked example

Break-even units    = Fixed costs / (Price - Variable cost per unit)
Break-even revenue  = Fixed costs / Contribution margin %

Contribution margin % = (Price - Variable cost) / Price

A Vienna cafe with €8.400 of monthly fixed costs (rent, insurance, manager salary, software, utilities). Average ticket €4,80. Average variable cost per ticket (coffee, milk, cup, card fee) €1,44. Contribution per ticket = €3,36. Contribution margin = 70%.

The cafe needs 96 paying tickets a day before EBIT turns positive. Ticket 97 contributes €3,36 to profit. Ticket 150 contributes €3,36 to profit. The contribution stays flat per unit; the leverage comes from running well past break-even.

Daily break-even targets by sector

Break-even varies wildly by fixed-cost load and contribution margin. The bands below are rough monthly fixed-cost ranges for a single-location owner-operated shop.

The right number for your shop is the one computed from your fixed costs and your contribution margin — not an industry average. Run the formula on your own figures monthly. The interesting number is not the absolute total; it is whether the gap between actual revenue and break-even is widening or narrowing.

Why it matters for daily P&L

Break-even converts abstract fixed costs into a daily revenue target you can hit or miss. A cafe owner who sees "€461 today" on their phone and looks at "€380 in the till" knows immediately the day was loss-making — without doing any math. The same owner who only sees a monthly P&L learns three weeks later, after eleven loss days have stacked up.

Used in the other direction, break-even is the planning floor for every cost decision. A €600/month rent increase shifts daily break-even by €23 in the cafe example. That tells you whether the new lease is workable before you sign it.

For the deeper version, including margin of safety and the relationship to contribution margin, see break-even analysis for small business.

Related concepts

• Break-even analysis for small business — the full diagnostic, with margin of safety.
• Contribution margin — the per-unit input to the break-even formula.
• Fixed cost coverage ratio — how comfortably gross profit pays for fixed costs.
• What fixed costs actually mean — the cost side of the calculation.

FAQ