Find how many clients you need to break even
Every client brings in revenue but also costs something to serve. What is left over — the contribution — goes toward fixed costs you pay regardless of how busy you are. Break-even is the number of clients whose combined contribution covers those fixed costs. Use it when deciding whether a pricing change or a new hire still works.
Result
- Revenue per client$1,000.00
- Variable cost per client$200.00
- Contribution per client$800.00
- Monthly fixed costs$4,000.00
- Contribution per client$800.00
- Exact break-even5 clients
- Clients needed5
With 5 clients you bring in $5,000.00 a month. 80% of each fee goes toward fixed costs and profit.
Formula and assumptions
Contribution per client = revenue per client − variable cost per client. Break-even clients = fixed costs ÷ contribution per client
- All figures are monthly and clients are billed every month.
- Every client pays the average revenue and has the average variable cost.
- Break-even means covering costs — it does not include profit or tax.
Worked example
A two-person marketing agency has monthly fixed costs of 4,000: rent, software and both partners' base pay. Each client pays 1,000 a month on average. Ad-management tools and a freelance writer cost about 200 per client per month.
- Contribution per client: 1,000 − 200 = 800
- Break-even: 4,000 ÷ 800 = 5
Five clients cover all fixed costs. The sixth client and every one after it adds 800 of profit a month.
The example uses round numbers in no particular currency. They are the values the calculator loads with.
What the inputs mean
- Fixed costs
- Monthly costs that don't change with the number of clients: rent, core software, insurance, base salaries.
- Variable cost per client
- What each additional client costs you each month: subcontractors, per-seat tools, ad-platform fees, delivery costs.
- Contribution
- Revenue per client minus variable cost per client — the part of each fee that is available to pay fixed costs and then profit.
Common mistakes
- Leaving your own pay out of fixed costs, so break-even looks easy while you earn nothing.
- Using your best client's fee as the average.
- Forgetting that variable costs often rise with bigger clients.
Limitations
- Treats every client as average. A few large clients can make the real picture very different.
- Monthly view only; it does not model one-off projects or seasonal income.
- Break-even covers costs but does not include tax or profit.
Results are estimates based on the numbers you enter. They are not tax, legal or accounting advice. Read the disclaimer.
Questions
Why is the result rounded up?
You can't have part of a client. If the exact answer is 5.6, five clients leave you short, so six is the real break-even point. The exact figure is shown too.
What if break-even can't be reached?
If each client costs as much as or more than they pay, adding clients only adds losses. Raise the fee, reduce the cost per client, or both.
Should my salary be a fixed cost?
Yes, if you want break-even to mean the business pays you as well as its bills. Otherwise break-even only shows when the business stops losing money.