The point where a business stops losing money. Everything below it is funded from capital; everything above it is profit.
Reviewed by Shaz SafderLast verified 2026-08-25✓ Formula checked
Break Even Analysis Calculator
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Break-even units
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Results are estimates for general guidance. Figures shown are not professional advice.
For education and general information onlyThis calculator is not legal, tax or financial advice and creates no professional relationship. Figures are estimates. Confirm anything you intend to rely on with a qualified adviser or the relevant UAE authority. Full disclaimer.
Contribution margin is the whole game
Every unit you sell contributes something towards your fixed costs. That contribution is the selling price minus the variable cost of producing that one unit. Break-even is simply fixed costs divided by that contribution.
The implication is often counterintuitive: raising your price by a small amount moves break-even far more than cutting fixed costs by the same amount, because price increases flow entirely into contribution.
A worked example
Fixed costs of AED 50,000 per month, a product selling at AED 200 with AED 120 of variable cost. Contribution is AED 80 per unit. Break-even is 50,000 divided by 80, which is 625 units per month, or AED 125,000 in revenue.
Raise the price to AED 220 and contribution becomes AED 100. Break-even drops to 500 units — a 20% reduction from a 10% price rise.
Margin of safety
If you are already trading, the gap between your current volume and your break-even volume tells you how far sales could fall before you start losing money. A margin of safety under 20% is generally considered exposed.
Do not forget UAE-specific fixed costsTrade licence renewal, establishment card, visa costs and office or flexi-desk rent are all fixed costs. They are easy to overlook when they are billed annually rather than monthly.
Frequently asked questions
How do you calculate break-even point?
Divide total fixed costs by the contribution margin per unit, where contribution margin is selling price minus variable cost per unit. The result is the number of units needed to cover all costs.
What is contribution margin?
The amount each unit sold contributes towards fixed costs and profit. It is the selling price minus the variable cost of that unit.
What is a good margin of safety?
It varies by industry, but a margin of safety below 20% generally indicates the business is vulnerable to a modest fall in sales.
Should VAT be included in break-even calculations?
Use net-of-VAT figures for both price and variable cost. VAT collected is not revenue — it is held on behalf of the Federal Tax Authority.
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