Revenue needed to cover licence and running costs.
Monthly revenue to break even
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Annual fixed costs
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Annual break-even revenue
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The number that tells you when the business pays for itself
Break-even is the revenue at which a business stops losing money and starts covering its costs. For a new UAE company the cost base has a shape that surprises first-time founders. A chunk of it is fixed and arrives whether or not you sell anything: the trade licence, the establishment card, visa fees, and whatever office or co-working arrangement your free zone or mainland licence requires. On top of that sits your monthly running cost, the rent, salaries, software, and subscriptions that recur every month. This calculator adds your one-off licence and setup cost to a full year of fixed running costs, then converts that total into the revenue you need to cover it.
The bridge between cost and revenue is your gross margin, the share of each dirham of sales left after the direct cost of delivering it. A consultancy might keep 70 fils of every dirham, a trading business far less. The tool divides annual fixed costs by that margin, because you do not need to earn your costs in revenue, you need to earn enough revenue that the margin on it covers your costs.
Working a typical first-year setup
Take the default figures. An annual licence and setup cost of AED 25,000, monthly fixed costs of AED 15,000, and a gross margin of 40 percent. The fixed costs come to AED 25,000 plus twelve months at AED 15,000, which is AED 205,000 for the year. Divide that by the 0.40 margin and the annual break-even revenue is AED 512,500, or about AED 42,708 a month.
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The chart shows why margin is the lever that matters. The dark line is the fixed cost you must cover, flat across the year. The teal bars are the contribution your sales generate at a 40 percent margin. Break-even is the point where the bars rise to meet the line.
One number to keep clean is VAT. If your turnover means you must register, the 5 percent VAT this calculator references is added to your prices, collected on behalf of the Federal Tax Authority, and paid over to it. It is never part of your margin, so do not let it inflate the revenue figure you compare against break-even. Treat VAT as money passing through your hands, not money you earn.
Where founders get the inputs wrong
The most common mistake is treating the salary you intend to draw as profit rather than a fixed cost. If you need AED 20,000 a month to live, put it in the monthly fixed costs line. A business that breaks even only by paying its founder nothing has not really broken even. The second mistake is an optimistic margin. Founders often enter the margin they hope to reach at scale, not the one they earn on early sales when they are discounting to win the first clients. Run the calculator twice, once at your realistic launch margin and once at your target, and you will see how far break-even moves. A practical tip: a business with high fixed costs and a thin margin has a punishing break-even, so before you sign a long office lease, check what it does to this number. Sometimes a flexible desk and a leaner licence buys you months of runway.
Questions new owners ask
Should corporate tax go into my fixed costs?
No, leave it out of this calculation. UAE corporate tax is charged on profit, and at break-even your profit is zero, so there is no tax to cover. Corporate tax only bites once you are earning more than break-even, and the first AED 375,000 of taxable income is taxed at zero in any case. Model break-even on costs and margin alone, then think about tax on the profit you make above it.
Free zone or mainland, which gives a lower break-even?
It depends on your costs, not a rule of thumb. Free zones often bundle the licence, visas, and a flexi-desk into one package, which can keep your fixed costs predictable and your break-even lower at the start. Mainland licences can cost more to set up but let you trade directly across the UAE without a local distributor. Put the actual quoted package costs into the licence and fixed-cost lines for each option and let the break-even figures decide it for you.