South Africa Break-Even Analysis Calculator
Determine how many units you need to sell to cover your costs and start making a profit.
The break-even point is where total revenue equals total costs. Below this point, you are making a loss.
The margin of safety shows how much sales can drop before you hit the break-even point. A higher margin means less risk.
To lower your break-even point: reduce fixed costs, reduce variable costs per unit, or increase your selling price.
In South Africa, factor in load-shedding costs (generators, UPS systems) as part of your fixed or variable costs.
Find out how many units you need to sell or how much revenue you need to cover all your costs
What is a break-even point?
The break-even point is where your total revenue exactly covers your total costs — you make no profit and no loss. For example, if your fixed costs are R50,000 per month (rent, salaries, insurance) and you make R200 profit on each product sold, you need to sell 250 units per month to break even.
What are fixed costs in a South African business?
Fixed costs stay the same regardless of how much you sell. Common examples include monthly rent (R8,000 to R30,000 for a small premises), employee salaries, insurance, accounting fees, and loan repayments. In South Africa, you also need to budget for load-shedding costs like generator fuel or battery backup, which can add R3,000 to R10,000 per month.
What are variable costs?
Variable costs change based on how much you produce or sell. These include raw materials, packaging, delivery costs, and sales commissions. For a restaurant, food ingredients are a variable cost. For a clothing brand, fabric and manufacturing labour per garment are variable costs. In South Africa, electricity costs can be semi-variable if your usage scales with production.
How do I use break-even analysis for pricing?
Once you know your break-even point, you can set prices that ensure profitability. If your product costs R150 to make and your fixed costs per unit (spread across expected sales) are R80, you need to charge at least R230 to break even. Adding a 30% margin means pricing at R299. VAT at 15% would make the shelf price R343.85.
How does VAT affect my break-even calculation?
If you are VAT-registered, exclude VAT from both your revenue and costs in the break-even calculation. VAT is a pass-through — you collect 15% from customers and pay it to SARS, so it does not affect your profit. If you are not VAT-registered (turnover below R1 million), include VAT in your costs because you cannot claim it back.
What is the contribution margin?
The contribution margin is the selling price minus the variable cost per unit. It shows how much each sale contributes towards covering your fixed costs. If you sell a product for R500 and the variable cost is R200, your contribution margin is R300. Divide your monthly fixed costs by R300 to find how many units you need to sell to break even.
How long should it take a new business to break even?
Most small businesses in South Africa aim to break even within 12 to 24 months. Service businesses with low overheads might break even in 3 to 6 months. Retail or manufacturing businesses with higher startup costs and stock requirements may take longer. The SEDA (Small Enterprise Development Agency) recommends having enough capital to cover at least 6 months of fixed costs before starting.
SARS-Aligned: Based on 2025 SARS rates and thresholds. For personal advice, speak to a qualified tax practitioner.
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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