Break-even Point: How Many Sales Before You Start Earning?
Every business has a magic number: the point where sales finally cover all your costs. Below it, you are losing money; above it, every sale adds to profit. That number is your break-even point, and computing it turns a vague “sana kumita” into a concrete daily target.
The three numbers you need
The formula
The break-even point in units is simple:
The part in parentheses — price minus variable cost — is your contribution margin: how much each sale contributes toward covering your fixed costs. Once fixed costs are fully covered, that same contribution becomes pure profit.
Worked example: a small food stall
Say you run a food stall with these numbers:
Price per meal — ₱150
Cost per meal — ₱60
Contribution per meal — ₱150 − ₱60 = ₱90
Break-even — ₱30,000 ÷ ₱90 = 334 meals / month
That is about 11–12 meals a day. Now you have a clear target: sell fewer than 12 meals a day and you are losing money; sell more and each extra meal earns you its full ₱90 contribution. Suddenly “is this stall working?” has a precise, checkable answer.
Why break-even is so powerful
Beyond telling you the target, break-even shows you exactly which levers move it. Two levers shrink the number of sales you need to survive:
- Raise your price (or trim variable cost): a bigger contribution per unit means fewer units to break even. Bumping the meal to ₱170 drops the target to about 273 meals.
- Cut fixed costs: lower rent or overhead directly lowers the finish line. Trimming fixed costs to ₱24,000 drops the target to about 267 meals.
This is also why pricing correctly matters so much — a few pesos of extra margin per unit meaningfully lowers how hard your business has to work just to survive. For sari-sari owners, it pairs naturally with knowing your true daily profit.
Frequently asked questions
What is the break-even point in simple terms?
It is the number of sales at which your total income exactly covers your total costs — no profit, no loss. Every sale beyond it adds profit; every sale short of it means you are still covering costs.
How do I compute break-even for my business?
Divide your monthly fixed costs by your contribution per unit (selling price minus variable cost per unit). The result is how many units you must sell each month to break even. A spreadsheet makes it instant as your costs change.
How can I lower my break-even point?
Increase your contribution per unit by raising price or reducing the cost to make each item, or reduce your fixed costs like rent and overhead. Any of these lowers the number of sales you need just to cover costs.
Find your break-even instantly
Our Break-even & Budget vs Actual sheet computes your break-even point automatically and tracks your plan against reality. Works in Excel and Google Sheets. Pay via GCash, Maya, or Maribank.