Question 1

What is a break-even point and why does it matter?

Accepted Answer

The break-even point (BEP) is the level of sales at which your total revenue exactly equals your total costs — you make neither a profit nor a loss. Below the BEP, your business makes a loss; above it, you make a profit. For Singapore SMEs, knowing your BEP is critical for pricing decisions, loan applications, and business planning. Banks and investors typically ask how many units or what revenue is needed before the business becomes profitable.

Question 2

How do you calculate the break-even point?

Accepted Answer

Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit. Contribution Margin = Selling Price − Variable Cost per Unit. For example, if your fixed costs are S$10,000/month, you sell each product at S$50, and variable costs are S$20/unit, the contribution margin is S$30. Break-even = S$10,000 ÷ S$30 = 334 units/month. Break-Even Revenue = Fixed Costs ÷ Contribution Margin Ratio. The CMR = S$30 ÷ S$50 = 60%, so BEP revenue = S$10,000 ÷ 60% = S$16,667/month.

Question 3

What is the contribution margin?

Accepted Answer

The contribution margin (CM) is the selling price minus the variable cost per unit. It represents how much each unit sold contributes towards covering your fixed costs and eventually generating profit. A high contribution margin means each sale has a bigger impact on profitability. The contribution margin ratio (CMR) expresses this as a percentage of the selling price — useful for comparing across products or business lines.

Question 4

What is the margin of safety in break-even analysis?

Accepted Answer

The margin of safety is how much your actual revenue exceeds the break-even revenue. It measures how far sales can fall before you start making a loss. A margin of safety of 30% means revenue can drop by 30% before you hit break-even. For Singapore startups and SMEs, maintaining a healthy margin of safety (ideally 20–30%+) provides a buffer against seasonality, customer churn, or economic downturns.

Question 5

What counts as a fixed cost vs variable cost for a Singapore business?

Accepted Answer

Fixed costs don't change with production volume: office rent, employee base salaries (including CPF), insurance premiums, SaaS subscriptions, bank loan repayments. Variable costs scale directly with output: raw materials, packaging, delivery charges (per shipment), freelancer fees per project, transaction-based payment gateway fees. Some costs are semi-variable (e.g., utilities, part-time staff), which you can either split or add as fixed costs for a conservative estimate.

Question 6

How can I lower my break-even point?

Accepted Answer

You can lower your break-even point by: (1) Increasing selling price — even a 5–10% price increase significantly improves contribution margin; (2) Reducing variable costs — renegotiating with suppliers, optimising production; (3) Reducing fixed costs — moving to a smaller office, reducing headcount, sharing resources; (4) Changing product mix — focus on higher-margin products. For Singapore F&B businesses, reducing food cost percentage (target <30%) and controlling rental (target <15% of revenue) are the main levers.

Units / Month	Revenue	Profit / (Loss)	Status
167	S$8.3K	S$-4,990.00	✗ Loss
251	S$12.6K	S$-2,470.00	✗ Loss
334 (BEP)	S$16.7K	+S$20.00	✓ Profit
418	S$20.9K	+S$2.5K	✓ Profit
501	S$25.1K	+S$5.0K	✓ Profit
668	S$33.4K	+S$10.0K	✓ Profit

Business Type	Typical Gross Margin	Key Fixed Cost
F&B / Restaurant	60–70%	Rent 10–15% of revenue
Retail (physical)	40–60%	Rent + staff: 30–45%
E-commerce / Online	30–50%	Marketing: 15–25%
SaaS / Software	70–90%	Development + hosting
Professional Services	50–80%	Salaries: 40–60%
Clinic / Healthcare	60–75%	Rent + locum fees

Break-Even Calculator Singapore 2026

Break-Even Benchmarks by Industry (Singapore)

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