Break-Even Calculator

How to use this break-even calculator

Most break-even analysis calculators assume you sell boxes of something. This one also works in billable hours and jobs, which is how freelancers and service businesses actually earn.

1. Choose Services or Products. For services, pick whether you charge by the hour or by the job.
2. Enter your monthly fixed costs: the bills you pay even in a month with no work.
3. Enter your rate (or average job price, or unit price) and the direct cost of each hour, job or unit.
4. For services, add your payment fees as a percentage, since card processing takes a share of every payment.
5. Optionally, add a target monthly profit, such as the pay you want to take home. The calculator shows the extra volume that needs.
6. Read the break-even point, the hours or jobs per week it implies, and copy the summary line.

Break-even formula

The break-even point is where total revenue equals total costs, so you neither make nor lose money. Each sale first pays for its own variable cost. Whatever is left, the contribution, goes toward fixed costs. Once enough contributions add up to your fixed costs, you have broken even.

The contribution margin ratio is (price − variable cost) ÷ price. These are the same formulas the U.S. Small Business Administration uses in its business guide.

Worked example: products

You have $2,700 a month in fixed costs, sell an item for $50, and each one costs you $20 to make and ship.

• Contribution per unit: $50 − $20 = $30
• Contribution margin ratio: $30 ÷ $50 = 60%
• Break-even: $2,700 ÷ $30 = 90 units a month
• Break-even revenue: $2,700 ÷ 0.60 = $4,500 a month

When the result isn’t a whole number, the calculator rounds units and jobs up, because selling part of a unit doesn’t cover anything. Break-even revenue is shown exactly, so it can be slightly lower than the rounded units × price.

Break-even point for a service business

For a service business, the “unit” is an hour or a job. The direct cost is whatever each hour or job costs you: supplies, mileage, a helper’s pay. Payment fees reduce what you keep from each dollar you bill.

Worked example: a freelancer billing by the hour

Your fixed costs are $2,700 a month: software, insurance, phone, a coworking desk, your accountant. You bill $100 an hour, each hour costs you about $7 in direct costs, and card fees take 3%.

• You keep per hour: $100 × 0.97 − $7 = $90
• Break-even: $2,700 ÷ $90 = 30 billable hours a month
• Per week: 30 ÷ (52 ÷ 12) = 6.92, so about 7 billable hours a week
• Break-even revenue: 30 × $100 = $3,000 a month

Breaking even only means the business pays its own bills. It doesn’t pay you yet. Enter the pay you want as a target monthly profit. With a $4,500 target, you need ($2,700 + $4,500) ÷ $90 = 80 billable hours a month, about 18.5 a week, and $8,000 in revenue.

By the job

If you charge per job, use your average job price. At $250 a job with $40 of direct costs and 3% fees, each job leaves $202.50. $2,700 ÷ $202.50 = 13.33, so you need 14 jobs a month, about 3.1 a week.

Break-even hours at different hourly rates

Your rate moves the break-even point more than anything else. Using the same example ($2,700 fixed costs a month, $7 direct cost per hour, 3% fees), here is how many billable hours you need at each rate. Hours are rounded up to the nearest tenth.

Going from $50 to $100 an hour more than halves the hours you need, because the direct cost per hour stays the same while what you keep nearly doubles.

Fixed vs variable costs for a service business

Getting this split right is most of the work. The SBA defines fixed costs as costs for a period that don’t change with how much you produce or sell, and suggests splitting semi-variable costs, like a phone plan with overage charges, into their fixed and variable parts.

Convert everything to monthly. Divide a yearly insurance premium by 12 and a quarterly bill by 3. The SBA also suggests adding a little extra, around 10%, for costs you can’t predict.

How to lower your break-even point

• Raise your rate. As the table shows, this has the biggest effect, because every extra dollar goes straight to covering fixed costs.
• Cut fixed costs. Every $90 you remove from monthly overhead in the example is one fewer billable hour a month.
• Pass direct costs through. Bill materials and mileage to the client, ideally with a markup, instead of absorbing them. The profit margin calculator shows what that does to your margin.
• Set a minimum job size. Short jobs carry the same travel and admin as long ones.
• Get paid faster. Break-even is about money in, not work done. Unpaid invoices don’t cover rent.

Common break-even mistakes

• Leaving out your own pay. Break-even with no salary for you is a floor, not a goal. Use the target profit field.
• Counting working hours as billable hours. Admin and sales time don’t earn anything directly.
• Forgetting yearly bills. A once-a-year insurance or license fee still needs to be in the monthly figure.
• Ignoring fees. A 3% card fee on $100 is $3 an hour, which adds up over a month.
• Using one busy month. Run it with a slow-month rate and volume too, so you know how bad a quiet month can get.

From break-even to your invoices

Your break-even number is a monthly invoicing target: at $100 an hour, you need $3,000 billed and paid every month before you earn anything. Tracking what you invoice against that number tells you early whether a month is on track.

Onigiri’s free plan covers 3 invoices a month with unlimited clients, shareable invoice links and payment status, so you can see what’s Sent, Overdue and Paid. PRO ($12/month or $108/year) adds unlimited invoices and income tracking, plus online card payments through your own Stripe account with a 0% Onigiri platform fee. For a single invoice, the free invoice generator makes a PDF without sign-up.

Frequently asked questions