BREAK-EVEN GUIDE

How do I calculate my small-business break-even point?

Short answer: break-even is the sales or contribution level where the business has covered the costs you included in the calculation and has not yet produced additional profit.

Decide what your break-even target should include

A basic accounting break-even may focus on fixed costs. For owner-operated businesses, planning is often more useful when you separately identify overhead, desired owner compensation and direct job costs.

Use contribution, not just revenue

If jobs have materials, subcontractors or other variable direct costs, not every revenue dollar is available to cover overhead.

Contribution = revenue − direct job costs

Your annual contribution target can then be compared with overhead and other planned needs.

Convert the target into productive-hour math

Required contribution per productive hour = annual contribution need ÷ annual productive hours

This gives service businesses a practical benchmark for testing jobs even when they use flat-rate customer pricing.

Break-even is a floor, not a goal

A business that only breaks even has little room for surprises, taxes, replacement equipment, slow periods or growth. Build a deliberate profit cushion above the minimum.

Use your own numbers

JJL Business Tools turns these ideas into practical targets using your actual costs, time and income goals.

Use the Break-Even Calculator