Business Break-Even Calculator — Australia 2026-27
Find out how many sales you need to cover your costs.
Model Australian business break-even with AUD revenue, GST-aware pricing, labour, rent, inventory, overheads, contribution margin, and target profit.
Australia Business Break-Even Notes
Australian business break-even analysis should separate GST from usable revenue and include wages, super, rent, freight, stock, subscriptions, and merchant fees.
Use this version to test whether a new location, product line, or service package can cover fixed overheads before owner drawings.
Australian version note: this business break even keeps the calculation anchored to AUD amounts, local product names, Australian tax language, and the way banks, employers, agencies, or advisers usually describe the inputs.
Local cues stay visible where they matter: ATO, PAYG, superannuation, Medicare levy, stamp duty, kilometres, comparison rate, APRA, Centrelink, GST, and Australian-dollar results are not rewritten into overseas vocabulary.
Use the output as an Australian estimate first, then sanity-check it against local quotes, lender criteria, government thresholds, state rules, or professional advice before relying on the number.
Uses GST-exclusive figures. Break-even = Fixed costs ÷ (Price − Variable cost). Not accounting advice.
Select the question that matches where you are right now.
Your break-even point is the minimum sales level where your business covers all its costs. Below this, you make a loss. Above this, every additional unit sold generates pure contribution margin as profit.
Every unit sold contributes its CM toward covering fixed costs. Once fixed costs are covered (at break-even), each additional unit sold generates pure profit. High CM ratio = fast profit growth above break-even.
High fixed costs relative to variable costs create "operating leverage." Above break-even, profits grow rapidly with each additional unit. Below break-even, losses accumulate quickly. This is why break-even analysis matters most for businesses with significant fixed overheads.
Break-even revenue = BE units × selling price = Fixed costs ÷ CM ratio. This is often more useful than units — it tells you the minimum monthly revenue your business must generate, regardless of how many products or services you sell.
Margin of safety (MOS) = Current units − Break-even units. It tells you how far sales can fall before you make a loss.
A 20%+ MOS means sales would need to fall by more than 20% before you make a loss. A 5% MOS means a small downturn pushes you into losses. Seasonal businesses should plan for their lowest-volume period to still be above break-even.
Stable recurring revenue businesses: 15–25% MOS is comfortable. Seasonal or project-based businesses: aim for 30%+ in peak months. High fixed cost businesses (restaurants, manufacturing): MOS below 10% is high risk — fixed costs cannot be easily reduced in a downturn.
You can improve MOS by: selling more units (increase MOS numerator), reducing break-even point (by raising prices, cutting variable or fixed costs), or both. The profit volume chart in Standard mode shows profit at 50%, 75%, 100%, 125%, and 150% of break-even — a quick visual of how much buffer you have.
Three levers reduce break-even — and pricing is the most powerful.
A 10% price increase on a 50% CM ratio product reduces break-even by ~17%. Every $1 price increase adds $1 to CM (fixed costs unchanged). Test price sensitivity carefully — some markets accept price rises readily; others are highly elastic.
Renegotiate supplier prices, reduce waste, improve production efficiency, or find cheaper inputs. Each $1 reduction in variable cost adds $1 to CM. This approach preserves volume while improving profitability.
Every $1 reduction in monthly fixed costs reduces break-even by 1 ÷ CM units. At $50 CM, cutting $1,000/month in fixed costs reduces break-even by 20 units. Review all fixed expenses annually — software subscriptions, insurance, and staffing are common areas.
Once you know your break-even, here are the practical applications.
Your break-even revenue is your minimum monthly revenue target. Set your sales goal above this — add your target profit to the calculation in Standard mode to see the units needed for any profit goal.
Before accepting a bulk discount or running a promotion, recalculate break-even at the lower price. A 15% discount on a 40% CM ratio product requires ~60% more volume just to maintain the same total profit. Use the calculator to sense-check every pricing decision.
Include break-even analysis in your business plan and budget. Lenders and investors want to know when a business becomes profitable. If you are starting a new business, estimate realistic sales volume relative to break-even to assess viability before committing capital.
The break-even formula, contribution margin, and how to use them
The break-even formula
Break-even units = Fixed Costs ÷ Contribution Margin per unit
Contribution margin (CM) = Selling price − Variable cost per unit
Break-even revenue = Break-even units × Selling price (or equivalently: Fixed costs ÷ CM ratio)
Example
Fixed costs: $10,000/month. Variable cost: $25/unit. Selling price: $75/unit. CM = $75 − $25 = $50/unit. CM ratio = $50/$75 = 66.7%. Break-even units = $10,000 ÷ $50 = 200 units/month. Break-even revenue = 200 × $75 = $15,000/month.
| Units sold | Revenue | Variable costs | Fixed costs | Profit/(Loss) |
|---|---|---|---|---|
| 100 | $7,500 | $2,500 | $10,000 | ($5,000) |
| 150 | $11,250 | $3,750 | $10,000 | ($2,500) |
| 200 ✓ BE | $15,000 | $5,000 | $10,000 | $0 |
| 250 | $18,750 | $6,250 | $10,000 | $2,500 |
| 300 | $22,500 | $7,500 | $10,000 | $5,000 |
Margin of safety
Margin of safety = Current units sold − Break-even units. This tells you how much sales can fall before you make a loss. Expressed as a percentage: (Current units − BE units) ÷ Current units × 100. A margin of safety of 20%+ is generally comfortable.
How to classify your business costs correctly for break-even analysis
Fixed costs
Fixed costs do not change with sales volume. They must be paid whether you sell zero or 10,000 units. Examples: rent, insurance, salaries of permanent staff, loan repayments, software subscriptions, accounting fees, and depreciation. These costs are the "overhead" that must be covered before any profit is made.
Variable costs
Variable costs change in direct proportion to sales volume. Every additional unit you sell incurs this cost. Examples: raw materials, cost of goods purchased for resale, per-transaction payment processing fees, freight and packaging per item sold, and sales commissions. In break-even analysis, variable costs are expressed per unit sold.
Semi-variable costs
Some costs are partly fixed and partly variable — for example, a base salary plus commission, or a fixed internet plan with overage charges. For break-even purposes, split these: put the fixed portion in fixed costs and the per-unit portion in variable costs.
| Cost type | Examples | In break-even formula |
|---|---|---|
| Fixed | Rent, salaries, insurance | Fixed costs ÷ CM = BE units |
| Variable | Materials, COGS, commissions | Subtracted from price = CM |
| Semi-variable | Base + bonus, tiered fees | Split into fixed and variable portions |
Three levers for reducing your break-even threshold
Lever 1: Raise prices
A price increase directly increases contribution margin. A 10% price rise on a 50% CM ratio product reduces break-even by approximately 17%. Warning: test price elasticity — some products lose volume when prices rise. The net effect on profit depends on how much volume you retain.
Lever 2: Reduce variable costs
Negotiate better supplier pricing, find cheaper raw materials, reduce packaging costs, or improve production efficiency. Every $1 reduction in variable cost adds $1 to CM per unit. Reducing variable costs from $25 to $20 on a $75 product (CM ratio: 73% vs 67%) reduces break-even from 200 to 167 units — saving 33 units/month.
Lever 3: Reduce fixed costs
Cut or eliminate fixed costs where possible: sublease unused space, renegotiate insurance, switch to pay-per-use software, reduce salaried headcount. Every $1,000/month reduction in fixed costs reduces break-even by $1,000 ÷ CM per unit. At $50 CM, that is 20 fewer units needed per month.
Combined impact example
Base case: $10,000 fixed, $25 variable, $75 price → BE = 200 units. Raise price to $80 (+$5) → BE = 182. Also cut fixed costs by $1,000 → BE = 164. Also reduce variable to $22 → BE = 156. Combined levers reduce BE by 22%.
Whether to include or exclude GST in your break-even figures
Use GST-exclusive figures
For break-even analysis, always use GST-exclusive figures — the price and costs before adding 10% GST. GST is collected on behalf of the government and flows straight through your business (you claim GST credits on inputs and remit the difference). It does not affect your profitability.
Example: $82.50 GST-inclusive price
Excluding GST: $82.50 ÷ 1.10 = $75 selling price. Use $75 in your break-even calculation. Similarly, if your variable cost including GST is $27.50, the ex-GST cost is $25 (and you claim the $2.50 GST back).
If not registered for GST
If your turnover is under $75,000 and you are not registered for GST, you do not charge or collect GST. Use your actual prices as they are — no adjustment needed. Once turnover exceeds $75,000, GST registration is mandatory and you must switch to GST-exclusive figures in your analysis.
GST registration threshold
Businesses with annual turnover of $75,000 or more must register for GST. For not-for-profit organisations, the threshold is $150,000. Once registered, charge 10% GST on taxable supplies and claim GST credits on business purchases (BAS lodgement required quarterly or monthly).
❓ Frequently asked Frequently asked questions
How do I calculate break-even for my Australian business?
Break-even units = Fixed monthly costs ÷ (Selling price − Variable cost per unit). At $10,000 fixed costs, $25 variable cost, and $75 selling price: break-even = $10,000 ÷ $50 = 200 units/month. Break-even revenue = 200 × $75 = $15,000/month. Use GST-exclusive figures in all calculations.
What is contribution margin?
Contribution margin = Selling price − Variable cost per unit. It is the amount each unit sold "contributes" toward covering fixed costs and generating profit. Once fixed costs are covered (at break-even), contribution margin becomes pure profit per unit. Expressed as a ratio: CM ÷ Price × 100 = CM%. A higher CM% means fewer sales are needed to cover fixed costs.
What is a good margin of safety for an Australian business?
A margin of safety of 20–30% above break-even is generally considered healthy for a stable business. This means sales would need to fall by 20–30% before you make a loss. Seasonal businesses or those in volatile industries should aim for higher margins of safety (30%+) to buffer slow periods. If your margin of safety is under 10%, a relatively small revenue drop could push you into loss.
How does GST affect break-even calculations?
Use GST-exclusive figures (prices and costs before the 10% GST) for break-even analysis. GST flows through your business — you collect it from customers and remit it to the ATO (after claiming GST credits on inputs via your BAS). It does not affect your profitability and should not be included in your selling price or cost figures for break-even purposes.
Where these figures come from
Business figures on this page are drawn from the Australian Taxation Office (business tax, GST, PAYG), Business.gov.au (the federal business registration hub), Fair Work (employer obligations), and ASIC (company and director rules).
- Company tax rate (25% / 30%) — ATO — Company tax rates.
- GST rules (10%) — ATO — GST.
- PAYG withholding & employer obligations — ATO — PAYG withholding.
- Business registration (ABN/ACN) — Business.gov.au.
- Employer pay & award obligations — Fair Work Ombudsman.
- Company & director rules — ASIC — Companies.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.