Break-Even Point: The Number Every Business Owner Must Know
Muhammad Arif
Founder of ArifLab
The number that keeps you honest
The break-even point is the number of sales (or RM of revenue) that covers all your fixed costs — after that, every sale is actual profit.
Businesses that do not know this number make two mistakes: they underprice (never reaching break-even) or they quit just before reaching it.
The formula, in plain RM
Break-even (units) = fixed costs ÷ (price per unit − variable cost per unit).
Example: rent + salaries + utilities = RM6,000/month. You sell a service at RM500 with RM100 of variable cost. RM6,000 ÷ RM400 = 15 services a month to break even.
- Fixed costs: rent, salaries, utilities, software — costs that stay
- Variable costs: materials, commission, delivery — costs per sale
- Price − variable cost = contribution per sale
- Fixed ÷ contribution = break-even units
What to do with the number
If 15 services a month sounds like a lot, you have three levers: raise the price, cut fixed costs, or cut variable costs. The break-even calculator shows which lever moves the number most.
Knowing the number also tells you when to stop: if you have not reached break-even in the time your plan allows, change the plan — do not just push harder.
Calculate your break-even in seconds
Free Break-Even Calculator — fixed costs, price and margin in; the number you must hit out.
Use the Break-Even Calculator →