Break-even point: how much do you have to sell each day to avoid losing money?
Before knowing whether you make money, you need to know how much you must sell to cover your costs. That is the break-even point: below it, you lose; above it, you earn.
Add up fixed costs
Fixed costs are those you pay every month even if you sell nothing: rent, electricity, salaries, phone, transport, subscriptions. Add them up over a month. For example: 300,000 rent, 200,000 salaries and 100,000 other costs make 600,000 a month.
Know your average margin
Calculate your average margin percentage on sales: (sales − cost of goods sold) ÷ sales. If you sell 1,000,000 of products bought for 800,000, your margin is 200,000, or 20%.
The break-even formula
Break-even point = fixed costs ÷ margin rate. With 600,000 of costs and a 20% margin: 600,000 ÷ 0.20 = 3,000,000 of revenue a month, about 100,000 per opening day. Below that, the business loses money.
How to lower the threshold
- Raise the margin: better purchase prices, adjusted selling prices.
- Cut unnecessary fixed costs.
- Sell more high-margin products.
- Reduce losses (breakage, expiry, theft).
Track it with Kaislo
Kaislo shows revenue, margin and expenses for the day, week and month. Compare them every week with your threshold to know whether you are above or below.
Sales, stock, customer credit and evening accounts in one place, on phone or computer. 30-day free trial.
Break-even point: how much do you have to sell each day to avoid losing money?
What is the break-even point?
The minimum revenue needed to cover all fixed costs with the margin earned on sales.
How do you calculate it simply?
Divide your monthly fixed costs by your average margin rate.