Business Glossary
How to Calculate Break-Even Revenue UK
Break-even revenue is the exact level of sales needed to cover all costs with zero profit or loss. Knowing your break-even is essential for pricing, cashflow planning, and understanding commercial risk.
The Formula
Break-Even Revenue = Total Fixed Costs ÷ Gross Margin %
Worked Example — UK SME
A UK distribution business: fixed overheads £156,000, gross margin 24%. Break-even = £156,000 ÷ 0.24 = £650,000. With revenue of £820,000, the business is £170,000 above break-even.
UK Benchmark
📊 Healthy UK SMEs trade 15–30% above break-even. Below 10% above leaves the business highly vulnerable to any revenue dip.
Common Questions
What is the difference between break-even revenue and units?
Break-even revenue is total sales value needed. Break-even units = break-even revenue ÷ average selling price. Units is more intuitive for single-product businesses.
How does a price increase affect break-even?
A price increase improves gross margin, which reduces break-even. A 5% increase on our example reduces break-even from £650,000 to approximately £612,000.
How often should I recalculate?
Whenever costs change significantly — after rent reviews, wage increases, or major supplier price changes. Quarterly is sufficient for most UK SMEs.
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