Margin of Safety & Sales Shock
How far could sales fall before you stop covering your costs? Test revenue drops of 5% to 20%.
Your numbers (per period)
$
%
Costs that move with sales: materials, stock, commissions, payment fees.
$
$
Enter revenue and variable cost % to see results.
Formulas & assumptions
- Contribution margin ratio = 1 − Variable cost %
- Break-even revenue = Fixed costs ÷ Contribution margin ratio (same logic as the Break-even calculator)
- Margin of safety = Revenue − Break-even revenue; % = ÷ Revenue
- Profit after a decline of d% = Revenue × (1 − d) × CM ratio − Fixed costs
- Revenue for target = (Fixed costs + Target profit) ÷ CM ratio
- Assumes the variable cost % and fixed costs stay unchanged as revenue moves.
What to check next
- Check your variable cost % against actual cost of sales over several months.
- List which fixed costs could be reduced or paused if sales dropped.
- Run a cash projection — profit and cash can move differently.
Want to understand this using your real business data?
SME Finance Helper can help you turn financial records into clearer reporting, cash-flow visibility, and actionable business insights.
Discuss Your Business NumbersResults are estimates based only on the values entered and are not a substitute for reviewing your business's actual records or professional advice. Example data is illustrative. Nothing you enter is stored or sent anywhere.