Break-Even Calculator

Find out how many units you need to sell before you start making a profit, and how many you need to reach a profit target.

Break-even formula

Contribution per unit = Selling price − Variable cost per unit Break-even units = Fixed costs ÷ Contribution per unit Break-even sales (₹) = Fixed costs ÷ Contribution margin ratio Units for target profit = (Fixed costs + Target profit) ÷ Contribution per unit

Example

Monthly fixed costs are ₹2,00,000. Each unit sells for ₹500 and costs ₹300 in materials and direct labour. Each sale contributes ₹200, so you need 1,000 units (₹5,00,000 of sales) a month to break even. To earn ₹1,00,000 profit you need 1,500 units.

Fixed vs variable costs

Fixed costs stay the same regardless of volume: rent, permanent salaries, insurance, software subscriptions, loan EMIs.
Variable costs rise with each unit sold: raw materials, packaging, shipping, payment gateway fees, sales commissions.

Using break-even analysis

Use it to test pricing (how a price rise changes the break-even point), to judge whether a new product or location is viable, and to set sales targets. The margin of safety, meaning how far actual sales are above break-even, shows how much sales can fall before you make a loss.

Frequently asked questions

What is contribution margin?

The amount each sale contributes towards fixed costs and profit: selling price minus variable cost per unit. As a ratio, it is contribution divided by selling price.

Does break-even include GST?

No. Use prices and costs excluding GST, because GST collected is passed on to the government.

What if I sell many products?

Use a weighted average contribution per unit based on your sales mix, or work out break-even sales in rupees using the overall contribution margin ratio.

Results are for planning and information only and are not accounting or financial advice. Check important figures with your accountant.