Break-even tells you the minimum you need to sell. It says nothing about how close you actually are to that line — and that gap is often the more important number.
Take two workshops, both with £5,000/month fixed costs and a £15 contribution margin per unit — break-even at 333 units either way.
| Units sold | Current profit | Margin of safety | |
|---|---|---|---|
| Workshop A | 400 | £1,000/mo | 16.7% |
| Workshop B | 360 | £400/mo | 7.5% |
Workshop B is still "profitable" — but a 7.5% sales dip erases all of its profit, while Workshop A can absorb more than double that drop and stay in the black. Two businesses that look similarly healthy on a profit-and-loss statement can be standing in completely different places relative to the edge.
Profit is a lagging number — it tells you what already happened. Margin of safety is closer to a forward-looking risk gauge: how much room is actually left before a bad month turns into a loss-making one. It's the number worth checking before a big customer is lost, a cost rises, or a slow season hits.
Enter your fixed costs, price, variable cost and current sales to see your real cushion.
Use the Break-Even Calculator →