Work out the revenue a business must bill to cover all fixed costs at its blended gross margin.
Because only the gross margin portion of revenue reaches fixed costs, break-even revenue is always larger than fixed costs — by a factor of one divided by the margin. At a 62% margin every unit of overhead needs about 1.6 units of sales. Owners routinely set revenue targets equal to their cost base, which understates the requirement by the whole gross margin gap.
Business Break-Even
Break-even revenue = fixed costs ÷ gross margin
Break-even revenue = fixed costs ÷ gross margin Because only the gross margin portion of revenue reaches fixed costs, break-even revenue is always larger than fixed costs — by a factor of one divided by the margin. At a 62% margin every unit of overhead needs about 1.6 units of sales.
Owners routinely set revenue targets equal to their cost base, which understates the requirement by the whole gross margin gap.
This calculator takes 3 inputs: Fixed and overhead costs per month, Blended gross margin, Current monthly revenue. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.