Break-even is the number of sales that pays all your bills: fixed costs divided by what each sale contributes. Know it and every decision (price, rent, hire) turns into a simple question: does this move the number somewhere I can reach?
Each sale contributes price minus its direct cost. A $4 coffee with $1.20 of beans, milk and cup contributes $2.80. If rent, wages and everything else fixed cost $2,800 a month, you break even at 1,000 coffees a month, about 33 a day. That is the whole formula. The power is what it makes visible.
Illustrative. Small changes to price and fixed costs move the survival line more than heroic sales pushes do.
One honest rule: include a real salary for yourself in fixed costs. A business that only lives because you work unpaid has not broken even. It is borrowing from you.
The sales level where revenue covers all costs: fixed costs divided by the contribution each sale makes. Below it you lose money; above it you earn.
It converts a price into a survival number: this price means we need N customers a month to live. If N is implausible, the price, the costs or the idea must change.
It should. A business that only survives because the owner works free is not breaking even; it is being subsidized by you.
We build it into every business plan. Free scoping call, fixed quote.
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