worldofcalcsBreak-even Calculator
Break-even units
1,250
Sales needed
₹12,50,000
Contribution per unit
₹400 (40.0%)
What is the break-even point?
The break-even point is how many units you must sell for your total sales to cover all your costs, so you make neither a profit nor a loss. Every unit sold after that adds profit. It is the first number to check before starting a business, launching a product or setting a price.
Break-even formula
Break-even units = fixed costs ÷ (price per unit − variable cost per unit)
Fixed costs stay the same however much you sell: rent, salaries, loan EMIs, software. Variable costs rise with each unit: materials, packaging, delivery, payment fees. Price minus variable cost is the contribution of each unit towards fixed costs. To reach a profit target, add it to the fixed costs.
Using the break-even point
- Lowering variable costs has a big effect: in the example, cutting the cost from ₹600 to ₹500 per unit drops break-even from 1,250 to 1,000 units.
- A price rise works the same way. A 10% higher price (₹1,100) lifts the contribution from ₹400 to ₹500 and also cuts break-even to 1,000 units, if sales hold up.
- Use prices without GST. GST you collect is paid to the government, so it isn't revenue.
- Compare the break-even with realistic sales. If you would need more customers than your market or capacity allows, rethink the price or costs.
- The margin of safety is how far sales can fall before you make a loss: actual sales minus break-even sales.
Worked example
- A small business with fixed costs of ₹5,00,000 a month
- It sells a product for ₹1,000 that costs ₹600 to make and deliver
- Contribution per unit: ₹1,000 − ₹600 = ₹400 (40% of the price)
- Break-even: ₹5,00,000 ÷ ₹400 = 1,250 units a month, or ₹12,50,000 of sales
- To make ₹2,00,000 profit a month: (₹5,00,000 + ₹2,00,000) ÷ ₹400 = 1,750 units
Break-even at different variable costs
Fixed costs of ₹5,00,000 a month and a price of ₹1,000 per unit.
| Variable cost per unit | Contribution per unit | Break-even units | Break-even sales |
|---|---|---|---|
| ₹400 | ₹600 | 834 | ₹8,33,333 |
| ₹500 | ₹500 | 1,000 | ₹10,00,000 |
| ₹600 | ₹400 | 1,250 | ₹12,50,000 |
| ₹700 | ₹300 | 1,667 | ₹16,66,667 |
| ₹800 | ₹200 | 2,500 | ₹25,00,000 |
The higher the contribution per unit, the fewer units you need to sell.