Result
Margin of safety, %
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Break-even point in units = fixed costs ÷ (price − variable cost per unit) — the same formula as the dedicated break-even calculator. Margin of safety in units = actual sales volume − break-even point.
Margin of safety, % = margin of safety in units ÷ actual sales volume × 100% — by how many percent sales could fall before the business flips from profit to loss. A value of 30% means sales could drop by a third before the company starts losing money.
Margin of safety measures risk, not efficiency: two businesses with identical profit can have very different margins of safety if their cost structures differ. A business with a high share of fixed costs (and correspondingly high operating leverage) usually has a thinner margin of safety — it needs to maintain a larger sales volume just to stay in the black.