How Much Revenue Do I Need to Cover Costs?
A simple way to find the minimum monthly sales target your business needs.
Many small businesses set sales goals based on hope. A better approach is to start from your costs and work backwards to the revenue you actually need to stay afloat.
The concept
You need enough revenue to cover your fixed costs and the direct cost of each sale. The faster way to express that is through your gross margin.
Simple formula
Required Revenue = Fixed Costs ÷ Gross Margin %
Why it matters
- Turns vague goals into a concrete monthly number.
- Shows the impact of adding a new fixed cost like rent or a hire.
- Makes pricing decisions easier.
Practical example
A consultant has fixed costs of €3,500 per month (office, software, insurance) and a gross margin of 70%. Required revenue = 3,500 ÷ 0.70 = €5,000 per month. Anything above that starts to generate real profit.
How to interpret
- If actual revenue is below this number, you are losing money.
- If far above it, you have room to invest or save.
Next steps
- Recalculate whenever fixed costs or margins change.
- Use it as your minimum monthly target.
Open the Break-even calculator →
This guide is for educational and planning purposes only. It is not accounting, tax, legal, investment, or financial advice.