Chartered Financial Analyst specializing in startup valuation and financial models for SaaS companies.
Find out how many subscribers your SaaS business needs to cover its fixed costs. Enter any three variables—Fixed Costs, Monthly Price, Variable Cost, or Subscriber Count—to solve for the fourth and map your path to profitability.
SaaS Breakeven Calculator
SaaS Breakeven Formula
The breakeven formula for a SaaS business is used to find the number of subscribers (Q) needed for total revenue to equal total costs.
Q = F / (P – V)
Solve for Fixed Costs (F):
F = Q * (P – V)
Solve for Subscription Price (P):
P = (F / Q) + V
Solve for Variable Cost (V):
V = P – (F / Q)
Variables Explained
- Fixed Costs (F): Total monthly costs that don’t change with users (e.g., server hosting, employee salaries, office rent).
- Price per Subscriber (P): The average monthly recurring revenue (MRR) you receive per subscriber.
- Variable Cost per Subscriber (V): The costs to support one subscriber (e.g., customer support time, data storage, API calls).
- Breakeven Subscribers (Q): The number of active subscribers needed to reach $0 in operating profit.
Related Calculators
- MRR (Monthly Recurring Revenue) Calculator
- SaaS LTV (Lifetime Value) Calculator
- CAC Payback Period Calculator
- Contribution Margin Breakeven Calculator
What is a SaaS Breakeven Point?
The **SaaS Breakeven Point** is the specific number of active subscribers a Software-as-a-Service company needs to cover all of its operating costs. At this point, the company’s Monthly Recurring Revenue (MRR) from those subscribers equals its fixed costs plus the variable costs associated with supporting them.
For a SaaS business, fixed costs are typically very high (salaries for developers, sales, and marketing; server infrastructure) while variable costs are often low (cost of data for one extra user). This high-leverage model means that once the breakeven point is passed, every new subscriber becomes highly profitable.
This calculation is the most fundamental metric for a SaaS startup. It answers the question, “How many customers do we need to stop losing money?” It is driven by the **Contribution Margin** (P – V), which in SaaS, represents the MRR from one user minus the cost of servicing that user. This remaining cash “contributes” to paying the large fixed costs.
How to Calculate SaaS Breakeven (Example)
Let’s calculate the breakeven point for a new SaaS company.
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Identify Fixed Costs (F):
The company’s total monthly fixed costs (salaries, servers, rent) are $20,000.
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Identify Price (P):
The average MRR per customer (subscription price) is $49.00.
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Identify Variable Cost (V):
The variable cost per subscriber (data, support, transaction fees) is $5.00.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin: $49.00 (P) – $5.00 (V) = $44.00.
Next, divide the fixed costs by this margin:
Q = $20,000 / $44.00 ≈ 454.55 -
Conclusion:
The SaaS company must have 455 active subscribers (rounding up) each month to cover its costs. The 456th subscriber will be its first unit of profit.
Frequently Asked Questions (FAQ)
Fixed Costs are typically developer/sales salaries, office rent, and base server/infrastructure costs. Variable Costs are things that scale directly with users, like data storage fees, bandwidth, API call charges, and payment processing fees.
This is a simplified breakeven model. It assumes ‘Q’ is a stable number of subscribers. In reality, you must sign up *more* than the breakeven number each month to replace the customers who churn (cancel). Your “new subscriber” goal must be `(Breakeven Subscribers) + (Churned Subscribers)`.
Because the fixed costs (F) are so high, the only way to become profitable is to have a strong contribution margin. A high margin (e.g., $44 in our example) means each new customer quickly helps pay down the fixed costs and pushes you towards profitability.
You can work backward. If you know your Fixed Costs (F), your Variable Cost (V), and the number of Subscribers (Q) you realistically think you can get, you can solve for (P) to find the minimum price you must charge to break even.