Break-Even Calculator
Units you must sell to cover costs
- Variable cost₹60060%
- Contribution₹40040%
| Variable cost | ₹600 | 60.0% |
| Contribution | ₹400 | 40.0% |
Profit at different volumes
| Units | Revenue | Total cost | Profit / (loss) |
|---|---|---|---|
| 0 | ₹0 | ₹3,00,000 | -₹3,00,000 |
| 250 | ₹2,50,000 | ₹4,50,000 | -₹2,00,000 |
| 500 | ₹5,00,000 | ₹6,00,000 | -₹1,00,000 |
| 750 | ₹7,50,000 | ₹7,50,000 | ₹0 |
| 1,000 | ₹10,00,000 | ₹9,00,000 | ₹1,00,000 |
| 1,250 | ₹12,50,000 | ₹10,50,000 | ₹2,00,000 |
| 1,500 | ₹15,00,000 | ₹12,00,000 | ₹3,00,000 |
Profit turns positive once volume passes the break-even point.
Understand the result
About the Break-Even Calculator
What is the break-even point?
The break-even point is the level of sales at which a business covers all its costs and makes neither a profit nor a loss. Each unit sold contributes its price minus its variable cost towards the fixed costs; once enough units have been sold to cover the fixed costs, every further sale is profit.
This break-even calculator finds the break-even units and revenue, the contribution margin, the profit at your expected sales, the margin of safety, and the units needed for a target profit.
How this calculator works
Every unit you sell brings in its price and costs you its variable cost. The difference — the contribution — goes towards paying the fixed costs. Break-even is simply the point at which enough units have been sold for those contributions to cover the fixed costs entirely. Past it, each further contribution is profit.
This is why the contribution margin matters more than the headline price. Two products selling at ₹1,000 are completely different businesses if one has a ₹600 variable cost and the other ₹200: the second breaks even in a third of the volume.
The margin of safety is the number most worth watching. It tells you how far sales can fall before you start losing money. A business breaking even at 90% of expected sales has almost no room for a bad quarter; one breaking even at 50% can absorb a serious downturn.
Fixed costs are only fixed within a range. Doubling volume usually means another shift, another machine or a bigger unit — at which point the fixed cost steps up and the break-even point resets.
Formula
Contribution per unit = price − variable cost
fixed costs
Break-even units = ──────────────────
contribution/unit
Break-even revenue = break-even units × price
fixed costs + target profit
Units for target profit = ─────────────────────────────
contribution per unit
Margin of safety = (expected − break-even) ÷ expected × 100Worked example
- Fixed costs ₹3,00,000 a month, selling price ₹1,000, variable cost ₹600.
- Contribution is ₹400 a unit, so break-even is 3,00,000 ÷ 400 = 750 units, or ₹7,50,000 of revenue.
- Expecting 1,200 units gives a margin of safety of 37.5% and a profit of ₹1,80,000.
What moves the break-even point
| Change | Contribution per unit | New break-even |
|---|---|---|
| Price raised to ₹1,100 | ₹500 | 600 units |
| Variable cost cut to ₹550 | ₹450 | 667 units |
| Fixed costs cut to ₹2,40,000 | ₹400 | 600 units |
A 10% price rise lowers break-even by 20% here, because the whole increase goes to contribution. Price is usually the most powerful lever — if customers accept it.
Assumptions & important notes
What this calculator assumes
- Selling price stays the same at every volume. In practice, larger volumes often require discounting.
- Variable cost per unit is constant. Bulk purchasing usually reduces it as volume rises.
- Fixed costs stay fixed across the whole range shown. They step up once capacity is exceeded.
- Everything produced is sold, with no inventory build-up.
- Only one product, or a constant sales mix across products.
Important notes
- For a business selling many products, work in contribution margin ratio terms: break-even revenue = fixed costs ÷ contribution margin ratio.
- Include the owner’s salary and loan interest in fixed costs. Leaving them out produces a break-even point that looks achievable but is not.
- A margin of safety below 20% is fragile. Either raise price, cut variable cost, or reduce the fixed cost base.
- The fastest lever is usually price: a 10% price rise with an unchanged cost base moves break-even far more than a 10% cost cut.
Frequently asked questions
What is the difference between fixed and variable costs?
Fixed costs are incurred whether you sell anything or not — rent, salaries, insurance. Variable costs arise only when you make or sell one more unit — materials, packaging, sales commission. Some costs are mixed; split them.
How do I break even faster?
Three levers: raise the price, cut the variable cost per unit, or reduce fixed costs. Price usually has the largest effect because it increases contribution directly without any operational change.
What if my variable cost exceeds the selling price?
Then there is no break-even point at all — every additional sale increases the loss. This is worth knowing before scaling up, because volume makes it worse rather than better.
How does this work with multiple products?
Use the weighted-average contribution margin ratio across your sales mix, and compute break-even in revenue rather than units. The result holds only while the mix stays roughly constant.
What is the margin of safety?
How far sales can fall before you reach break-even, as a percentage of expected sales. With expected sales of 1,200 units and break-even at 750, the margin of safety is 37.5%.
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