Flipping & Projects · Formula v1.0.0
Break-Even Calculator
Find the point where a project stops losing money, cash break-even units and the payback period that recovers your initial investment.
Cash break-even
21 units / year
≈ $32,542 annual revenue
- Contribution margin per unitRevenue per unit − variable cost per unit
- $1,180.00
- Annual fixed costs
- $24,000
- Cash break-even unitsFixed costs ÷ margin, operating profit exactly zero
- 21
- Cash break-even revenue
- $32,542
- Investment break-even unitsUnits needed to also recover the initial investment (in one year)
- 72
- Projected annual net (cash)
- -$9,840
- Payback periodInitial investment ÷ annual net cash flow
- n/a
- Margin of safetyHow far projected units can fall before losses begin
- -69.5%
Break-even analysis separates costs into fixed (incurred no matter what) and variable (per unit of activity). Each rented month or unit sold contributes its margin toward covering fixed costs.
The cash break-even point is the number of units where total contribution exactly equals fixed costs, below it you lose money, above it every extra unit adds profit.
Separately, the payback calculation asks how long the annual net cash flow needs to recover your initial investment, a different hurdle that most investors also care about.
Cash break-even units = Fixed costs ÷ (Revenue per unit − Variable cost per unit) · Payback = Initial investment ÷ Annual net cash flow
Contribution margin: What one unit of activity adds toward fixed costs and profit.
Cash break-even: Operating profit = 0; fixed and variable costs exactly covered.
Payback period: Time for cumulative net cash flow to equal the initial investment.
A short-let unit: $60,000 initial investment, $24,000 annual fixed costs, $420 variable cost per rented month, $1,600 revenue per rented month.
Margin = $1,180 per month. Cash break-even = 24,000 ÷ 1,180 ≈ 20.3 rented months per year, at 12 months/year this business never breaks even on cash: a red flag.
If revenue reached $3,000/month, the margin would be $2,580 and cash break-even ≈ 9.3 rented months; the $60,000 payback would then take about 8.6 years at full occupancy, long, but at least positive.
- •Assumes constant per-unit revenue and cost; real projects have seasonal and scaling effects.
- •Payback ignores the time value of money (use NPV/IRR analysis for that).
Formula reference
Cash break-even units = Fixed costs ÷ (Revenue per unit − Variable cost per unit) · Payback = Initial investment ÷ Annual net cash flow
- Contribution margin, What one unit of activity adds toward fixed costs and profit.
- Cash break-even, Operating profit = 0; fixed and variable costs exactly covered.
- Payback period, Time for cumulative net cash flow to equal the initial investment.