Break-even Revenue

Definition

Break-even revenue is the revenue required to cover fixed costs given your gross or contribution margin.

Formula

Break-even revenue = fixed costs / gross margin

Example

If fixed costs are $50,000/month and gross margin is 60% (0.6), break-even revenue ~ $50,000 / 0.6 = $83,333/month.

How to use it

• Use contribution margin when variable costs beyond COGS are material.
• Recalculate when pricing, mix, or discounts change materially.
• Segment break-even by product or plan if margins differ.
• Pair break-even revenue with volume assumptions to estimate break-even units.

Common mistakes

• Using net margin instead of gross/contribution margin.
• Forgetting semi-fixed costs that are effectively fixed at your scale.
• Ignoring seasonality that creates temporary break-even misses.

Why this matters

This term matters because cash timing and risk are usually the difference between a plan that works on paper and a plan that survives. Use consistent definitions so decisions are comparable over time.

Practical checklist

• Write a 1-line definition for "Break-even Revenue" that your team will use consistently.
• Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
• Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
• Use a calculator that references this term (e.g., Break-even Pricing Calculator) to sanity-check assumptions.
• Read the related guide (e.g., Break-even pricing: contribution margin, break-even units, and profit) for context and common pitfalls.

Where to use this on MetricKit