one-line definition
Break-even point is the number of customers or revenue level where your total income exactly covers all costs, and you stop losing money.
formula: Break-even point = Fixed costs ÷ Contribution margin per customer
tl;dr
For a bootstrapped builder with $2K/mo in fixed costs and $50/mo contribution per customer, break-even is 40 customers. Know your number. It's the minimum viable business — everything above it is profit.
Simple definition
The break-even point is when your revenue exactly equals your total costs — both fixed (hosting, tools, your living expenses) and variable (per-customer costs). Below break-even, you're burning savings. Above it, you're profitable. For solo founders, break-even turns "is this business working?" into a specific target: "I need N paying customers."
How to calculate it
Divide your total monthly fixed costs by the contribution margin per customer (what each customer pays minus their variable costs).
Formula: Break-even point = Fixed costs / Contribution margin per customer
Example: Your fixed costs are $1,800/month (hosting $200, tools $100, your minimum salary $1,500). Each customer pays $39/month with $7 in variable costs, so contribution margin per customer is $32. Break-even = $1,800 / $32 = 56.25, rounded up to 57 customers.
Example
You build a scheduling tool for freelancers. Fixed costs: $500/month for infrastructure and tools, plus $2,500/month minimum salary you need to live. Total fixed costs: $3,000/month. You charge $25/month with $4 in variable costs (Stripe fees, email sending, server allocation). Contribution margin: $21 per customer. Break-even = $3,000 / $21 = 143 customers. That feels like a lot. You test raising prices to $39/month — contribution margin jumps to $34. New break-even: 89 customers. The price increase lost 10% of signups but reduced your target by 38%. You'd reach sustainability faster at the higher price.
Related reading
Related terms
- Burn Rate
- Runway
- Unit Economics
FAQ
Should I count my own salary as a fixed cost?+
Yes — even if you're not paying yourself yet, include a minimum living wage as a fixed cost. Otherwise your break-even number is artificially low and you'll never actually be sustainable.
How do I lower my break-even point?+
Two levers: reduce fixed costs (cheaper tools, fewer subscriptions, no office) or increase contribution margin per customer (raise prices, reduce variable costs, or upsell). Raising prices is usually the fastest path.