Your break-even point is the amount you have to sell before the business stops losing money. You work it out with two numbers: the costs you pay whether you sell anything or not, and the money left from each sale after what it cost you to make or deliver it. Divide the first by the second and you get the number of customers you need. That is the most useful single figure in a new business.
At a glance
| Feature | Detail |
|---|---|
| What it tells you | How much you must sell before the business stops losing money |
| The first number | The costs you pay whether you sell anything or not — rent, insurance, your wages |
| The second number | What is left from each sale after what it cost you to make or deliver it |
| The sum | The first divided by the second. The answer is in customers, not pounds |
| What it is really for | Knowing how many customers a week means you are safe |
The costs you pay whether you sell anything or not
These are your fixed costs. Rent, insurance, your phone, software subscriptions, the accountant, the vehicle sitting on the drive, and your own wages. They arrive in a month where you sell nothing and they arrive in a record month. Fixed costs is the short name, and that is what we will call them from here.
Two things go in here that people leave out. Your own wages — the amount you need to live on is a cost of the business, not a bonus at the end. And the vehicle in full: fuel, insurance, servicing, tyres, road tax, breakdown cover and the finance or lease payment. Leave either out and your break-even point comes out flatteringly low.
Add them up for one month. That is the first number.
What is left from each sale
Now take one sale — one job, one order, one customer for a month — and take off only the costs that happened because that sale happened. Materials, delivery, card fees, packaging, waste: the bits you would not have spent if the customer had never called.
What remains is your margin, the money that sale contributes towards the fixed costs. It is not profit. Nothing is profit until the fixed costs are covered. Our pricing guide covers how to get this number right in the first place.
That is the second number.
Putting the two together
Divide the fixed costs by the margin from one sale, and you get how many sales you need in a month to cover everything. The sale after that one is the first to put money in your pocket.
The answer comes out in customers, not pounds, and that is why it is worth doing. "Five a week" is something you can picture in a diary. "£2,000 of sales" is not.
A worked example
Take City Florists, a small subscription flower business. It sells a weekly bouquet plan at £40 a month and a fortnightly plan at £22 a month, and each delivery costs £6 to fulfil.
Start with the margin. A weekly subscriber gets four deliveries a month, so £24 of that £40 goes straight out, leaving £16 a month from every weekly subscriber. A fortnightly subscriber gets two deliveries at £6, so £12 of the £22 is spent, leaving £10.
Now the fixed costs. The workshop is £700 a month. The van and everything that goes with it — fuel, insurance, servicing, tyres, road tax and breakdown cover — comes to £400. Business insurance is £50, the website and software £50, the accountant £60, marketing £540. And the founder needs £2,200 a month to live on. Added up, that is £4,000 arriving whether anyone orders flowers or not.
Now the sum. Four thousand pounds of fixed costs, divided by £16 from each weekly subscriber, is 250. So City Florists breaks even at 250 weekly subscribers. At that point it is taking £10,000 a month in sales — but £6,000 goes out on deliveries, leaving exactly the £4,000 the bills need.
Read that back, because it is the bit that surprises people. A £10,000-a-month business, and the founder is taking £2,200 and no more. Subscriber 251 is the first one whose £16 is genuinely spare.
If your own version of this feels fiddly, it is the sort of thing software should do. Create a mini business plan in minutes with Plan.business. Put in your rate, your hours and your costs, and it works out the rest — what you will make, when you break even, and what you need to charge to hit your target.
What moves the break-even point
Three levers, and they do not move it by the same amount.
Put the price up. If the weekly plan goes from £40 to £44, the four deliveries still cost £24, so the margin rises from £16 to £20. Four thousand divided by twenty is 200. A 10% price rise cut the break-even point by 50 subscribers — a fifth of the customer base — and nothing else changed. This is why pricing is the most powerful thing on the list.
Cut a fixed cost. Move to a smaller unit at £300 instead of £700 and the fixed costs drop to £3,600. Divided by the same £16, that is 225 subscribers. A £400-a-month saving took 25 customers off the target. Real, but less dramatic than the price rise.
Discount. This is the one that catches people out. Offer 10% off and the weekly plan becomes £36, while the four deliveries still cost £24. The margin falls from £16 to £12. Four thousand divided by twelve is 334 subscribers. A 10% discount means you need 84 more customers — a third more work — to end up in exactly the same place. Do the sum before you offer one.
The mistakes worth avoiding
Leaving your own wages out. A break-even point that assumes you work for nothing tells you when the business survives, not when you do.
Counting only the obvious per-sale costs. Card fees, waste, returns and the drive between jobs are all real, and leaving them out makes the margin look bigger than it is.
Forgetting that tax comes later. Breaking even means costs are covered. Income tax, National Insurance and, once you pass the £90,000 threshold, VAT still come out of what is left.
Working it out once. Costs move. Redo it whenever a big one changes — a new unit, a van, a first employee — because all three raise the line.
What the number is actually for
Once you know your break-even point, convert it into something you can see in a diary.
Two hundred and fifty subscribers is a standing number: City Florists has to hold 250 weekly subscribers to be safe. If a handful cancel each month, the founder needs to win at least that many back before any month counts as growth. For a business that sells jobs rather than subscriptions, divide the monthly number by four to get the weekly one: twenty jobs a month is five a week.
Then you know, on any given Wednesday, whether the week is safe. It also tells you what a new fixed cost really means: a £300-a-month unit is not £300, it is nineteen more subscribers.
If your break-even point turns out to be more customers than you could physically serve, the business does not work at that price yet. Better to find that out on paper than eight months in.
Figures correct as of September 2026. Tax thresholds, fees and rates change; check the linked GOV.UK pages before acting. Prices and costs shown are indicative and vary by area and by what's included.
What is Plan?
Plan is a free business operating system for people starting or newly running a UK business. It walks you, one simple step at a time, from your elevator pitch through brand, product and pricing, to a complete business plan — then uses everything it now knows about the business to help with the basics: logo and brand, marketing, a website, a bank account, funding, insurance, company registration. You can use as much or as little as you want.
You never see a spreadsheet. You answer short questions about what you charge and what things cost, and Plan works out your break-even point and reads it back as a number of customers — then shows what happens to it when the price or the costs change.
Frequently asked questions
How do I calculate my break-even point? Add up the costs you pay whether you sell anything or not, for one month — rent, insurance, software, the vehicle, your own wages. Then work out what is left from one sale after the costs that only happen because of that sale. Divide the first by the second to get how many sales you need each month.
What is a good break-even point for a small business? There is no universal number, but there is a test: can you realistically serve that many customers in a month, at your capacity, with the customers your area produces? If the break-even point is more customers than you could physically handle, the price or the cost base has to change.
Does break even include my own wages? It should. If you leave your wages out, the number tells you when the business covers its bills while you work for free. Put in the amount you need to live on, and the break-even point tells you when both the business and you are covered.
What is the difference between break even and profit? Break-even is the point where sales exactly cover costs, so you make nothing and lose nothing. Profit is everything above that line. Each sale past break-even contributes its full margin, which is why the gap between a good month and a bad one is bigger than it looks.
How does discounting affect break even? More than most people expect, because a discount comes entirely out of your margin. If a £40 sale costs you £24 to deliver, cutting the price by 10% cuts what you keep from £16 to £12. You would need roughly a third more customers to stand still.
Two ways to do this
Do it by hand. Add up one month of fixed costs. Work out what one sale leaves you. Divide. Then convert the answer into customers a week and write it somewhere you will see it. That takes about twenty minutes.
Or let Plan do the sums. Start free in Plan. It runs in your browser — nothing to download. Answer short questions about your prices and costs, and Plan works out the break-even point, shows what a price change would do to it, and exports the whole plan as a spreadsheet. Do just this bit, or the whole plan; both are fine.