Short answer
Break-even point = monthly fixed costs / (price per job - variable cost per job). The bottom half is the contribution margin: what each job leaves to pay overhead. With assumed fixed costs of $8,400.00 a month, a $240.00 job and $70.00 of variable cost, you need 49.41 jobs, so 50 jobs a month, to break even.
- Break-even jobs = fixed costs / contribution margin per job. Always round up to a whole job.
- Example: $170.00 contribution per job needs 49.41 jobs to cover $8,400.00 a month.
- Leaving owner pay out of fixed costs understates break-even; adding $5,000 of owner pay raises it to 78.82 jobs.
- A $20 price rise cut break-even from 49.41 to 44.21 jobs in the example.
- All figures are assumptions for one example business. Replace them with your own.
On this page
- What is the formula for calculating the break-even point?
- Break-even calculator (free, no signup)
- Worked example: break-even jobs per month for a service business
- How to calculate the break-even point for a service business, step by step
- The common mistake: leaving your own pay out of fixed costs
- Break-even with a profit target and margin of safety
- How to create a break-even analysis in Excel
- Break-even calculator vs spreadsheet template
- Step-by-step
- FAQ
What is the formula for calculating the break-even point?
Break-even units = fixed costs / (price per unit - variable cost per unit). For a service business the "unit" is a job, a visit or an hour. Break-even revenue = fixed costs / contribution margin %.
| Term | Meaning | Example |
|---|---|---|
| Fixed costs | Costs that do not change with the number of jobs this month | $8,400 a month |
| Price per job | Average amount billed per job | $240 |
| Variable cost per job | Costs that only happen because the job happened | $70 |
| Contribution margin | Price - variable cost | $170 |
| Contribution margin % | Contribution / price | 70.83% |
| Break-even jobs | Fixed / contribution | 49.41 |
| Break-even revenue | Fixed / contribution % | $11,858.82 |
Online break-even calculators use this same formula. What a single-input calculator cannot tell you is how to sort a service business's costs into fixed and variable, which is where most break-even numbers go wrong. I build pricing math; I am not an accountant, and this is not financial advice.
Break-even calculator (free, no signup)
Enter your monthly fixed costs, average price per job and variable cost per job. The calculator returns contribution margin, break-even jobs and break-even revenue a month.
Worked example: break-even jobs per month for a service business
With $8,400.00 of monthly fixed costs and $170.00 of contribution per job, the business needs 49.41 jobs a month, which rounds up to 50. That is about 11.4 jobs a week (52 weeks / 12 months = 4.33 weeks a month). Every figure is an assumption; replace it with your own.
Worked example: Base case: owner-operator service business (assumed figures).
| Item | Value |
|---|---|
| Fixed costs a month (input) | $8,400.00 |
| Average price per job (input) | $240.00 |
| Variable cost per job (input) | $70.00 |
| Contribution margin per job | $170.00 |
| Contribution margin % | 70.83% |
| Break-even jobs a month | 49.41 |
| Break-even revenue a month | $11,858.82 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Where the example numbers come from:
| Fixed cost | Per month |
|---|---|
| Vehicle payment and insurance | $900 |
| Business insurance | $500 |
| Storage / shop rent | $1,200 |
| Software and phone | $300 |
| Marketing | $1,000 |
| Part-time office help | $3,800 |
| Accounting and other | $700 |
| Total | $8,400 |
Variable cost per job ($70) is materials $40, fuel $12, card processing at an assumed 3% of $240 ($7.20) and disposal $10.80. Each of those rises or falls with the number of jobs, which is the test for variable.
How to calculate the break-even point for a service business, step by step
List a month of costs, sort each into fixed or variable, average your price per job, and divide. The sorting step is where the answer is won or lost.
- Pull the last three months of expenses and average them.
- Mark each cost fixed (arrives even in a zero-job month) or variable (only with jobs).
- Add owner pay to fixed costs; the business has not broken even if you worked for free.
- Divide total revenue by number of jobs for an average price per job.
- Divide variable costs by number of jobs for variable cost per job.
- Fixed costs / (price - variable cost) = break-even jobs. Round up.
If you bill by the hour, use hours as the unit. At an assumed $85 an hour with $25 of variable cost per hour, $8,400.00 of fixed costs needs 8,400 / 60 = 140 billable hours a month, about 32.3 a week. For hourly-rate setting in full, see the overhead and profit calculator guide.
The common mistake: leaving your own pay out of fixed costs
A break-even that excludes the owner's pay is the point where the business survives while the owner works unpaid. Put a realistic owner salary in fixed costs, and the true break-even appears.
Worked example: Same business with $5,000 a month of owner pay added to fixed costs.
| Item | Value |
|---|---|
| Fixed costs a month (input) | $13,400.00 |
| Average price per job (input) | $240.00 |
| Variable cost per job (input) | $70.00 |
| Contribution margin per job | $170.00 |
| Contribution margin % | 70.83% |
| Break-even jobs a month | 78.82 |
| Break-even revenue a month | $18,917.65 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Adding an assumed $5,000 a month of owner pay lifts break-even from 49.41 to 78.82 jobs, or $18,917.65 of revenue a month. Two related errors:
- Counting labour as fixed when it is paid per job. If a helper is paid only for jobs worked, their pay is variable. Salaried staff are fixed.
- Using markup instead of margin to set price. A price built as cost plus a percentage keeps less than the percentage. The markup vs margin calculator guide shows the gap.
Break-even with a profit target and margin of safety
To hit a profit target, add it to fixed costs: jobs needed = (fixed costs + target profit) / contribution margin. For an assumed $3,000 monthly profit target: ($8,400 + $3,000) / $170 = 67.06 jobs, so 68 jobs.
Margin of safety tells you how far sales can fall before you lose money: (actual jobs - break-even jobs) / actual jobs. At 60 jobs a month: (60 - 49.41) / 60 = 17.65%. The business makes 60 x $170 - $8,400 = $1,800 that month.
"What is a good break-even ratio?" has no universal answer. A larger margin of safety means a slow month is less likely to become a loss, so watch the trend in your own numbers.
Price is the other lever. Raising the average job from $240 to $260 lifts contribution to $190.00 and cuts break-even to 44.21 jobs:
Worked example: Same as base case, price raised from $240 to $260.
| Item | Value |
|---|---|
| Fixed costs a month (input) | $8,400.00 |
| Average price per job (input) | $260.00 |
| Variable cost per job (input) | $70.00 |
| Contribution margin per job | $190.00 |
| Contribution margin % | 73.08% |
| Break-even jobs a month | 44.21 |
| Break-even revenue a month | $11,494.74 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
For how to set that price from costs, see how to price a job.
How to create a break-even analysis in Excel
Excel has no dedicated break-even function; you type the formula. Put inputs in B2:B4 and results below them, and the sheet updates as your costs change.
Contribution margin per job
=B3-B4B2 = fixed costs a month, B3 = average price per job, B4 = variable cost per job.
Break-even jobs a month (rounded up)
=ROUNDUP(B2/(B3-B4),0)Returns 50 with the example inputs. Remove ROUNDUP to see 49.41.
Break-even revenue a month
=B2/((B3-B4)/B3)Fixed costs divided by contribution margin %. Returns $11,858.82 in the example.
Jobs for a profit target
=ROUNDUP((B2+B5)/(B3-B4),0)B5 = target monthly profit. Returns 68 with a $3,000 target.
Margin of safety
=(B6-B2/(B3-B4))/B6B6 = actual jobs this month. Format as %. Returns 17.65% at 60 jobs.
To find the price that breaks even at a set number of jobs, Excel's Goal Seek (Data > What-If Analysis > Goal Seek) can change the price cell until profit equals zero. To chart it, build a column of job counts from 0 to 80, compute revenue and total cost for each, and insert a line chart: break-even is where the lines cross.
Break-even calculator vs spreadsheet template
An online calculator answers one question once. A spreadsheet answers it every month with your real numbers, next to your profit and cash. Use the free calculator above for a quick check; use a spreadsheet if you want to track it.
| Need | Online calculator | Spreadsheet |
|---|---|---|
| One quick answer | Yes | Yes |
| Uses your actual monthly costs | Only what you type each time | Yes, from your P&L |
| Tracks break-even month to month | No | Yes |
| Sits next to profit and cash | No | Yes |
Small Business P&L + Cash Flow Tracker
The spreadsheet version of this guide for Excel & Google Sheets: type your numbers into the highlighted cells and the formulas do the rest. One-time $14.99, no subscription, instant download.
See the Small Business P&L + Cash Flow Tracker →Buy now — $14.99All 7 templates — $49Instant access by email after checkout via Payhip.
The small business P&L and break-even template is $14.99 one-time for Excel and Google Sheets. It tracks revenue, COGS, gross profit and margin, operating expenses and net profit, and shows break-even revenue and a running cash position. It is also in the $49 Complete Toolkit. The break-even analysis template page has a short demo, and the profit and loss template guide shows the P&L layout it sits beside.
Step-by-step: Break-Even Calculator for a Small Service Business: Jobs a Month, Formula and Excel
- Collect three months of costs. Average three recent months of expenses so one unusual month does not distort the answer.
- Sort fixed vs variable. Fixed costs arrive in a zero-job month; variable costs only arrive with jobs. Put owner pay in fixed.
- Find price and variable cost per job. Divide revenue by number of jobs for average price, and variable costs by jobs for variable cost per job.
- Compute contribution margin. Price per job minus variable cost per job. This is what each job contributes to fixed costs.
- Divide and round up. Fixed costs divided by contribution margin gives break-even jobs a month. Round up to a whole job.
- Add a profit target. Add target monthly profit to fixed costs and divide again to see jobs needed to hit it.
Skip the setup: Small Business P&L + Cash Flow Tracker
The spreadsheet version of this guide for Excel & Google Sheets: type your numbers into the highlighted cells and the formulas do the rest. One-time $14.99, no subscription, instant download.
See the Small Business P&L + Cash Flow Tracker →Buy now — $14.99All 7 templates — $49Instant access by email after checkout via Payhip.
Frequently asked questions
How do you determine the break-even point for a business?
Divide monthly fixed costs by the contribution margin per unit, which is price minus variable cost. For a service business the unit is usually a job or an hour. Example: $8,400 fixed costs and a $240 job with $70 variable cost gives $170 contribution and 49.41, so 50, jobs a month.
Is there a break-even formula in Excel?
Excel has no built-in break-even function, but the formula is one line: =B2/(B3-B4), with fixed costs in B2, price in B3 and variable cost in B4. Wrap it in ROUNDUP to get whole jobs. Goal Seek can also solve for the price that makes profit zero.
What is the format for a break-even analysis in Excel?
Put inputs at the top (fixed costs, price per unit, variable cost per unit), then results below: contribution margin, contribution margin %, break-even units, break-even revenue and margin of safety. Optionally add a table of unit counts with revenue and total cost to chart where the lines cross.
Is 100% ROI breaking even?
No. Breaking even is 0% ROI: you got back exactly what you spent. A 100% ROI means you got back your cost plus the same amount again in profit, doubling the money. Break-even is the floor; ROI measures how far above it you are.
What is a good break-even ratio?
There is no universal target. The useful ratio is margin of safety: actual sales minus break-even sales, divided by actual sales. In the example, 60 jobs against a 49.41-job break-even is a 17.65% margin of safety. A higher figure means more room before a slow month becomes a loss.
How do you calculate break-even sales?
Divide fixed costs by the contribution margin percentage. Contribution margin % is (price - variable cost) / price. In the example, $170 / $240 is 70.83%, so $8,400 of fixed costs needs $11,858.82 of revenue a month to break even.
How much is a business worth with $500,000 in sales?
Sales alone cannot answer it. Business value is usually based on profit or cash flow, plus risk and growth, so two businesses with the same $500,000 of sales can be worth very different amounts. Start by knowing your break-even and profit; a business valuer or broker can take it from there.
I'm not a contractor, landlord or accountant. I build the pricing maths, and every number on this page shows its working so you can check it instead of trusting it. Watch the breakdowns on YouTube →