Break-even is the revenue at which you stop losing money. Most owners calculated it once, years ago, and have not touched it since.
Everything that determines it moved in 2026.
The calculation
Break-even revenue = fixed costs ÷ contribution margin %
Fixed costs are what you pay whether you sell anything or not: rent, insurance, salaries not tied to output, software, finance, compliance, your own wage.
Contribution margin % is (revenue − variable costs) ÷ revenue. Variable costs move with volume: materials, subcontractors, freight, merchant fees, direct labour hours.
A business with $280,000 of fixed costs and a 42% contribution margin breaks even at $666,667.
What moved this year
Every one of these changes your number.
| Change | Effect |
|---|---|
| Award rates +4.75%, minimum wage +5.97% (1 Jul 2026) | Fixed costs up if salaried; variable up if hourly |
| Superannuation at 12% | Applies to the higher base |
| Payday Super (1 Jul 2026) | Timing, not amount — but affects the cash break-even |
| Fuel excise to 53.7c/L (3 Aug 2026) | Variable up for anyone running vehicles |
| Cash rate 4.35%; finance costs +36.3% since Mar 2020 | Fixed costs up |
| Insurance +51.7% since Mar 2020 | Fixed costs up |
| Electricity DMO down up to 14% (1 Jul 2026) | Fixed costs down, if you act on it |
Run the same business with 2026 inputs — fixed costs to $310,000, contribution margin down to 39% as fuel and direct labour rose:
New break-even: $794,872.
That is $128,000 more revenue required to reach the same zero. If your sales are flat, you did not stand still. You went backwards by $128,000 and it never appeared as a single visible event.
Three versions worth knowing
Accounting break-even — the number above. Where profit equals zero.
Cash break-even — where cash in equals cash out. Different, because it excludes depreciation and includes loan principal, tax instalments and the Payday Super timing shift. This is the one that determines whether you can pay people.
Owner-paid break-even — where the business covers its costs including a market wage for you. Around 70% of Australian sole traders and micro-businesses earn under $75,000, which means many are operating between accounting break-even and owner-paid break-even without knowing there is a difference.
→ Are you actually paying yourself?
What to do with the number
Convert it to a daily or weekly target. $794,872 a year across 250 trading days is $3,179 a day. Far more useful than an annual figure, because you can check it against reality every week.
Work out your margin of safety. (Current revenue − break-even) ÷ current revenue. Below 15% is uncomfortably thin — a single lost client or slow quarter puts you under.
Test the levers against it. A 5% price rise with fixed costs unchanged lifts contribution margin and drops break-even sharply — usually more than any realistic cost reduction. That is the same arithmetic that puts price at the top of the profit lever hierarchy.
Recalculate every six months, and always after a compliance change. The July and August 2026 changes alone justify redoing it now.
The common mistake
Treating your own wage as a residual rather than a fixed cost.
If you exclude it, your break-even is artificially low and the business looks viable at a revenue level that cannot actually sustain you. That is how owners end up working full-time in a business that technically “breaks even” while they personally do not.
Put your market replacement cost in the fixed cost line. The number will be higher and considerably more honest.
Where to go next
- Are You Actually Paying Yourself?\n- Gross Margin by Service Line\n- Pricing for Profit\n- Australian Business Compliance Calendar
Sources: Fair Work Commission Annual Wage Review 2026; Department of Infrastructure fuel excise fact sheet; Australian Energy Regulator; RBA Statement on Monetary Policy May 2026; AMP Bank GO Small Business Cost Pressure Index 2026. Worked figures illustrative. General information, not financial advice.