The break-even point is the number of units, or the sales value, at which revenue covers fixed and variable costs, leaving neither profit nor loss. Enter your monthly fixed costs, the selling price per unit and its variable cost, and the break even point calculator returns break-even in units and in SAR, along with the contribution margin and its ratio. Add expected sales and the chart shows where you stand, with your margin of safety and the volume needed for a target profit. The ready examples are a coffee shop, a restaurant and a retail shop with small-business costs in Saudi Arabia, all priced before VAT.
How to calculate the break-even point
Each unit you sell first pays for its own variable cost; whatever is left of its price goes towards fixed costs. Divide fixed costs by that remainder to see how many units it takes to cover them all, then round up, because you cannot sell part of a unit.
BEP (units) = Fixed costs ÷ (Price − Variable cost per unit)
All three are loaded in the calculator under Coffee shop, Restaurant and Retail shop. The figures illustrate the method; they are not market averages.
Contribution margin and contribution margin ratio
Contribution margin is the selling price of a unit minus its variable cost; the contribution margin ratio is that margin divided by the price. Variable costs rise with every unit you sell: raw materials or bought-in stock, packaging, a sales rep's or delivery app's commission, and card payment fees on mada and credit cards. Fixed costs are due even when nothing sells: rent, base salaries and the GOSI contributions on them, the municipality licence fee spread across the months, subscriptions and depreciation.
The ratio earns its keep when prices vary. In the retail example it is 30%, so every SAR 100 of sales leaves SAR 30 towards fixed costs, whichever item was sold.
Break-even point in sales (SAR) and margin of safety
Break-even in sales is fixed costs divided by the contribution margin ratio, which equals break-even units multiplied by the selling price. The margin of safety is the gap between expected sales and break-even: it tells you how far sales can fall before you start losing money.
BEP (SAR) = Fixed costs ÷ CM ratio · MOS = (Expected − BEP) ÷ Expected
Units needed for a target profit
Add the profit you want to fixed costs and divide the total by the contribution margin per unit. For a monthly profit of SAR 20,000, the coffee shop needs (45,000 + 20,000) ÷ 12 = 5,416.67, which rounds to 5,417 cups and SAR 97,500.00 in sales. Type the figure into Target profit this month and the volume appears under the result.
Break-even for more than one product (sales mix)
When items carry different margins, the calculator weights the average margin by each item's share of units sold, divides fixed costs by it, and splits the break-even units across items in the same proportions. Switch on Several products at different prices and enter each item's price, variable cost and share.
The answer holds only while the mix holds. If the lowest-margin item takes a bigger share, break-even rises even though costs have not changed.
Reading the break-even chart
The sales line starts at zero and climbs by the selling price with each unit; the total cost line starts at the fixed-cost level and climbs by the variable cost. They cross at the break-even point. To the left of it costs exceed sales, which is the loss zone; to the right is the profit zone. Units grow from left to right, and the Move your sales along the chart slider shifts your sales marker and reads out sales, cost and profit at each volume.
Common mistakes in break-even analysis
- Using a VAT-inclusive selling price. A VAT-registered business in Saudi Arabia collects 15% from the customer and pays it over to ZATCA, so it is not part of your margin. A cup sold for SAR 18 including VAT is SAR 15.65 before it.
- Entering a whole month's variable cost in the per-unit field.
- Leaving out small variable costs such as card fees and delivery commission, which makes the margin look bigger than it is.
- Forgetting the owner's salary, if the owner works in the business, or depreciation, in fixed costs.
- Mixing periods: annual fixed costs against monthly expected sales.
- Treating break-even as a target, when it is the floor at which you make nothing.
What to do with the result
Test one decision at a time. If the coffee shop raised the price of a cup by one riyal to SAR 19, the margin would become SAR 13 and break-even would drop to 3,462 cups. Download the analysis as a PDF to attach to a feasibility study or a financing request, or as an Excel file to change the numbers yourself; the workbook uses live formulas and includes a table of sales, cost and profit at different volumes. If you are preparing a feasibility study for a restaurant or coffee shop, the feasibility study template picks up from this analysis.
When actual costs drift from your estimate
The calculator runs on numbers you estimate, but once you are trading, stock prices and overheads change from month to month and break-even moves with them. At Microtec we provide businesses in the Kingdom with an ERP accounting system for sales, purchasing, inventory, finance and HR, so the contribution margin comes from your actual sales and purchase invoices rather than an estimate written before opening day.