Common Break-Even Mistakes (and a Better Way)

Updated 23 August 2026 · Business and gst

A Break-Even Calculator gives a fast answer, but the answer is only as good as what goes in. These are the mistakes we see most often with Break-Even calculations in Australia, and how to avoid them.

1. Undercharging as a contractor

Your rate must cover super, leave, unbilled time and business costs, not just the salary you want.

2. Forgetting on-costs

An employee costs well above their salary once super, workers comp and payroll tax are included.

3. Mixing up margin and markup

A 50% markup is a 33% margin. Pricing with the wrong one can erase profit.

4. Spending GST collected

GST belongs to the ATO. Keep it aside until your BAS is due.

5. Overlooking the detail that matters most here

Test a price rise here. A small increase in margin can cut break-even volume sharply.

How the break-even units changes with price per unit

A common mistake is getting one input slightly wrong. Here is what happens to the break-even units when “Price per unit ($)” is off by up to 20% in either direction, with everything else held steady.

Price per unit ($)	Break-even units
40	1,000
45	667
50	500
55	400
60	334

At 40 the result is 1,000; at 60 it is 334. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.

A quick sense check

Break-even units = fixed costs ÷ (price − variable cost per unit). With typical inputs the calculator returns break-even units of 500. If your own result looks wildly different, check that each figure is in the right unit and period (weekly, monthly or yearly) before drawing conclusions.