Formula
How to Calculate Breakeven Point
The moment when a company's revenue equals its costs, requiring no additional external funding to sustain operations.
Breakeven Point (units)
Breakeven = Fixed Costs / (Price per Unit - Variable Cost per Unit)
Where
- Fixed Costs
- = Total fixed operating costs
- Price
- = Revenue per unit sold
- Variable Cost
- = Cost per unit produced
What Is Breakeven Point?
The breakeven point is when monthly revenue covers all operating expenses, meaning the company no longer burns cash. For venture-backed startups, reaching breakeven provides optionality — the company can choose to raise for growth rather than survival.
Worked Example
After 18 months of aggressive spending, the SaaS company hit breakeven at $5M ARR with a 30-person team, giving them leverage to raise their Series B on favorable terms.
Why Breakeven Point Matters
Companies that can reach breakeven have survival insurance. They're not forced to raise in bad markets or accept unfavorable terms.
Related Terms
Frequently Asked Questions
How do you calculate Breakeven Point?
Breakeven Point is calculated using the formula: Breakeven = Fixed Costs / (Price per Unit - Variable Cost per Unit). The moment when a company's revenue equals its costs, requiring no additional external funding to sustain operations.
What is a good Breakeven Point?
What constitutes a "good" Breakeven Point depends on context — the fund's stage, vintage year, and strategy. Check our benchmarks and calculators for specific ranges.