Every business must understand the implications of setting and changing prices and deciding on its level of overheads. The safety margin is a measure of how close the business is actually trading to its break-even point.

The Safety Margin % = (Actual sales ($) / Breakeven point) x 100

A value of more than 100% means that the business is selling more than it requires to breakeven, so it should be making a profit. The further above 100% the safety margin is, the higher the profit margin and the better able the business will be to withstand a downturn in sales.