Break-even analysis examples, five ways
One formula, five real cost structures: a coffee shop, a restaurant, a retail store working through seasonal markdowns, a SaaS business (where "break-even" actually means two different things), and a billable-hours agency. Every number below is worked and checked, not rounded from a rule of thumb.
Contribution margin ratio by industry, from the five worked examples below. This is the single biggest driver of how many units or customers each business actually needs to break even.
Coffee shop
A café sells a latte for $5.50. Beans, milk, cup, lid, and the card processing fee together cost $1.75, a contribution margin of $3.75 per cup, a 68.2% ratio. Monthly fixed costs (rent, staff wages, a POS subscription, insurance) total $11,000.
Break-even revenue: $11,000 ÷ 0.682 = $16,133. Spread across a 26-day operating month, that's 2,934 ÷ 26 ≈ 113 cups a day, a concrete daily target that's far more actionable for a barista or shift lead than a monthly total alone.
Restaurant
A restaurant's average check is $38. Food cost, allocated labor per cover, and card fees together run $16 per guest, a $22 contribution margin, a 57.9% ratio, meaningfully thinner than the coffee shop's because a full meal service carries far more labor and food cost per transaction than a single beverage. Monthly fixed costs (rent, salaried staff, utilities, insurance) total $42,000.
Break-even revenue: $42,000 ÷ 0.579 ≈ $72,545. Across a 30-day month, that's roughly 64 covers a day, a number a restaurant can check directly against nightly covers served, which is exactly the metric most POS systems already report without any extra work.
Retail, with markdowns
A boutique sells an item for $68 against a $27 cost, a $41 contribution margin, a 60.3% ratio. At $9,500 in monthly fixed costs, full-price break-even is $9,500 ÷ $41 = 231.7 → 232 units a month. That figure is only true, though, in a month where everything sells at full price, which real retail rarely does.
Late in a selling season, the same store marks 40% of its remaining inventory down 40% to clear it: $68 × 0.60 = $40.80, against the same $27 cost, a contribution margin of just $13.80 on those units, a third of the full-price figure. If 60% of a month's unit sales happen at full price and 40% at that markdown, the blended contribution margin isn't $41 anymore.
Break-even at that blended mix: $9,500 ÷ $30.12 = 315.4 → 316 units, 84 more units than the full-price scenario, for the identical store with the identical fixed costs. A concrete month makes the risk clearer still: selling exactly 150 units at full price and 100 at the markdown generates $7,530 in total contribution margin against $9,500 in fixed costs, a $1,970 loss for the month, even though the store moved 250 units and would have looked busy on the sales floor the whole time. Break-even shifts with the sales mix, not just with total units sold, a distinction pure full-price break-even math never surfaces.
SaaS: the dual break-even
This is where most break-even guides quietly conflate two different, both-legitimate numbers. Worked separately, on the same business, below.
A SaaS product charges $79 a month. Hosting and support cost $9 per subscriber, a $70 contribution margin, an 88.6% ratio, far higher than any of the physical-goods examples above, since serving one more subscriber costs almost nothing extra. Monthly fixed costs (salaries, infrastructure, tools) total $56,000.
These are genuinely different numbers answering genuinely different questions. The first, 800 subscribers, is the standard break-even calculation, applied at the company level: how many total paying subscribers does the business need, all at once, to cover its fixed costs. The second, 6.4 months, has nothing to do with the company's total size at all. It's how long a single new customer's $70 monthly contribution margin takes to repay the $450 it cost to acquire them in the first place, independent of how many other subscribers exist.
A business can be well past its company-wide break-even, comfortably profitable overall, while still running an uncomfortably long CAC payback period on new customers, which matters directly for cash flow: money spent on acquiring a customer this month doesn't come back for 6.4 months, regardless of how healthy the rest of the business looks. A business currently at 500 subscribers, adding 25 net new subscribers a month, is (800 − 500) ÷ 25 = 12 months away from company-wide break-even, a timeline entirely separate from the 6.4-month CAC-payback clock running on every individual customer acquired along the way.
"When does this business break even" and "when does this customer pay for themselves" sound like the same question in a SaaS context. They aren't, and the two numbers can move in opposite directions at the same time.
Professional services / agency
An agency bills clients $185 an hour. The fully loaded cost of that billable hour, the contractor's pay plus an allocated share of overhead, runs $95, a $90 contribution margin, a 48.6% ratio. Monthly fixed costs (office, admin salaries, software) total $28,000. Here, the "unit" is a billable hour rather than a physical item or a subscriber.
A 4-person team, each realistically billable for about 130 hours a month after accounting for admin time, vacation, and non-billable work, has 520 hours of total monthly capacity. Break-even at 312 hours means the team needs roughly 312 ÷ 520 = 59.8% utilization, framing break-even not as a dollar figure but as a utilization rate, the specific number agencies already track weekly and can check this calculation against directly.
Comparing all five industries
The contribution margin ratio does most of the explaining across every row: SaaS runs highest because serving one more subscriber costs almost nothing; agencies run lowest because every additional billable hour still costs most of another person's time to deliver. A business with a thin CM ratio needs a much larger volume of activity to cover the identical fixed cost base as a business with a fat one, which is exactly why the ratio, not just the dollar figure, is worth tracking over time.
Building your own
Every example above uses the identical formula: Break-even units = Fixed costs ÷ Contribution margin per unit, with only the actual numbers changing by industry. Run your own fixed costs, price, and variable cost through the break-even point calculator for an instant result, or download the free break-even Excel template for a working spreadsheet with a chart, target profit, and multi-product support already built in. For a SaaS business specifically, the customer lifetime value calculator runs the CAC payback side of the dual break-even covered above.
Frequently asked questions
Any calculation with three real numbers: fixed costs, price per unit, and variable cost per unit, run through Break-even units = Fixed costs ÷ (Price − Variable cost). See the five fully worked examples above for realistic numbers by industry.
SaaS break-even actually means two different things worth calculating separately: company-wide subscriber break-even (fixed costs ÷ contribution margin per subscriber) and CAC payback (how many months until one customer's subscription revenue recovers what it cost to acquire them). See the SaaS section above for both, worked side by side.
Yes, but the blended contribution margin has to account for the mix of full-price and marked-down sales, not just the full-price margin. A retailer selling some inventory at full margin and some at a markdown needs a weighted-average contribution margin across that mix. See the retail example above.
CAC payback period is how long it takes one customer's contribution margin to repay the cost of acquiring them, a per-customer timeline. Break-even is a company-wide volume (units or subscribers) needed to cover all fixed costs. Both matter, and they answer different questions.
Treat each billable hour as the unit: Break-even hours = Fixed costs ÷ (Billable rate − Cost per billable hour). Divide that by your team's total available billable hours to get the utilization rate needed to break even. See the agency example above.
Run your own numbers on the break-even point calculator, or see the full CVP analysis calculator for target profit and margin of safety.