Free calculator
Break-even revenue calculator
- Covers fixed costs
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- Covers fixed + your salary
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- Covers fixed + salary + debt
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- Cushion on current revenue
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- Gross profit today
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Arithmetic on figures you supply, and a single blended gross margin is a simplification — a business with several product lines has several margins. It assumes fixed costs stay fixed, which stops being true at some volume.
Why there are three lines
A conventional break-even tells you when the business stops losing money. That is the least interesting of the three numbers to somebody who has just borrowed to buy it.
- Fixed costs. The traditional line. Useful, and not sufficient.
- Plus your salary. If you need to live on this business, your draw is not optional and belongs below the line, not above it.
- Plus debt service. The line that decides whether you keep the business. Miss this one for long enough and the lender, not the market, ends the story.
The gap between current revenue and that third line is your actual cushion — how far trade can fall before the deal stops working.
Stress the cushion against something specific
A percentage cushion is abstract until you attach it to an event. Take your largest customer, or your busiest quarter, and ask what the cushion looks like without it. A business with 20% headroom and a customer worth 30% of revenue does not have 20% headroom.
That is the same test as customer concentration, arriving from the other direction, and it is worth running both ways.
The gross margin assumption is doing most of the work
Every line here is fixed costs divided by gross margin, so the margin drives the answer more than anything else you enter. Two cautions:
- Take it from the returns, not the listing. A margin quoted in a broker’s summary and a margin computed from the tax returns are frequently different numbers.
- A blended margin hides a mix. If the business sells several things at different margins, the blend holds only while the mix holds. Model the mix shifting against you.
Where the margin itself is in question, that is a quality-of-earnings problem rather than a calculator problem.
Frequently asked questions
Should my salary really count as a cost?
If you need to draw a living from the business, yes — treating it as optional produces a break-even number you cannot actually operate at. If you have other income and genuinely intend to reinvest, set it to zero and read the middle line as the theoretical floor rather than the practical one.
Why divide by gross margin rather than subtracting costs?
Because fixed costs are covered out of gross profit, not out of revenue. Each dollar of sales contributes only its margin toward the fixed base, so the revenue required is the fixed base divided by that margin. It is the reason a small margin change moves the break-even so sharply.
What cushion is enough?
There is no standard figure, and anyone quoting one is guessing. What matters is the cushion relative to how volatile this particular business is: a route-based service business with hundreds of customers and a business with three customers need very different headroom for the same comfort.
Current revenue is below the third line. Is the deal dead?
Not necessarily, but the price or the structure has to change — less debt, more equity, a longer amortisation, or a lower price. What does not work is assuming revenue growth you have not yet demonstrated. Model the deal on the business as it is today.
Educational only — not a valuation, a loan pre-approval, or a lender's number. Confirm specific rules, rates, and forms with the relevant New York State agency, attorney, CPA, lender, or insurer before acting. The formulas behind this tool are documented on the methodology page.