Optional: calculate units needed to reach a profit target
Break-Even Point in Units
883
Break-Even Revenue
$22,075.00
Contribution Margin
$17.00
Everything you need to know about break-even analysis for your New Zealand business
What is break-even analysis?
Break-even analysis determines the point at which your total revenue equals your total costs, meaning you are neither making a profit nor incurring a loss. It tells you how many units of a product or service you need to sell to cover all of your fixed and variable costs. This is a fundamental tool for business planning, pricing decisions, and understanding the minimum performance required for your business to be financially viable in New Zealand.
How is the break-even point calculated?
The break-even point in units is calculated using the formula: Fixed Costs ÷ (Selling Price Per Unit − Variable Cost Per Unit). The denominator is known as the contribution margin per unit -- the amount each sale contributes toward covering your fixed costs. For example, if your fixed costs are $15,000, your selling price is $25, and your variable cost is $8, the contribution margin is $17 and you need to sell 883 units to break even.
What is contribution margin?
The contribution margin is the difference between the selling price and the variable cost per unit. It represents the portion of each sale that contributes to covering your fixed costs and, once those are covered, to generating profit. The contribution margin ratio expresses this as a percentage of the selling price. A higher contribution margin means each unit sold covers more of your fixed costs, resulting in a lower break-even point and faster path to profitability.
How can I lower my break-even point?
There are three main strategies to lower your break-even point: reduce fixed costs by negotiating lower rent, cutting overhead, or sharing resources; lower variable costs by finding cheaper suppliers, improving production efficiency, or reducing waste; and increase your selling price if the market allows, which directly increases your contribution margin. Remember to account for GST (15%) in your pricing if your business is GST-registered in New Zealand.
Note: This calculator provides estimates based on the inputs you provide. It assumes a linear cost structure and does not account for economies of scale, seasonal demand variations, or tax implications such as GST. For complex business planning, consult a qualified chartered accountant or business adviser.
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Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms