Break-Even Purchase Calculator

How to calculate the break-even point?

The break-even point identifies the moment when the cumulative savings from a purchase equal its initial cost.

Formula: Break-even Months = Upfront Cost / Monthly Savings

Using the break-even calculator: an example

Suppose you buy an energy-efficient appliance for $1,200 that saves you $40 per month on electricity.

Step-by-step calculation:

1. Identify the total cost ($1,200).
2. Determine monthly savings ($40).
3. Divide 1,200 by 40 to get 30 months.
4. Divide 30 by 12 to find it takes 2.5 years to pay off.

Frequently Asked Questions

What is a good break-even period?

Generally, a break-even period under 3 years is considered a strong investment for household items or appliances.

Should I include maintenance costs?

Yes, for the most accurate result, subtract any new monthly maintenance costs from your gross monthly savings.

What does a negative break-even mean?

If your savings are zero or negative, the purchase will never pay for itself through cost reduction alone.