Any business operating in Illinois needs to determine their break-even point. It tells you exactly how much you need to sell to cover your costs, and when you'll start making a profit.
Our Break-Even Calculator (below) helps you determine the minimum revenue required to run a profitable business.
Three Components: How Our Break-Even Calculator Works
The break-even point is calculated using three core elements: fixed costs, variable costs, and sales price.
Fixed Costs
Fixed costs remain constant regardless of how much you sell:
- Rent or commercial lease
- Salaries (non-commission employees)
- Insurance premiums
- Equipment leases
- Business licenses and permits (required in Illinois)
- Utilities (base charges)
Example: If your fixed monthly costs are $20,000, this amount stays the same whether you sell 10 or 1,000 units.
Variable Costs
Variable costs change based on production or sales volume:
- Cost of goods sold (COGS)
- Raw materials
- Shipping and packaging
- Sales commissions
- Transaction fees
Example: If each product costs $10 to produce, that's your variable cost per unit.
Sales Price
This is the price at which you sell your product or service to customers.
Example: If you sell a product for $25, that's your unit price.
Break-Even Formula
Break-Even Point (Units) = Fixed Costs ÷ (Sales Price − Variable Cost)
Complete Example:
- Fixed Costs: $20,000
- Price per Unit: $25
- Variable Cost per Unit: $10
- Contribution Margin: $15 ($25 - $10)
Break-Even = $20,000 ÷ $15 Break-Even = 1,334 units
To break even, you must sell 1,334 units per month. Every unit sold after that generates profit.
