Break-Even Point Calculator
The sales volume where your business stops losing money, and the volume that delivers the profit you actually want.
Fixed costs: rent, salaries, subscriptions, EMIs. Variable costs: materials, packaging, delivery, payment gateway fees, per-unit labour.
The break-even formula
Every unit you sell contributes its price minus its variable cost toward covering fixed costs. Break-even is the point where those contributions exactly absorb the fixed costs.
Break-even units = Fixed costs ÷ Contribution per unit
Units for target profit = (Fixed costs + Target) ÷ Contribution per unit
Example: a café with ₹5,00,000 monthly fixed costs selling at ₹1,200 average ticket with ₹700 variable cost contributes ₹500 per order, so it breaks even at 1,000 orders a month, about 33 a day. To bank ₹2,00,000 profit it needs 1,400 orders. Seeing the daily number is often the moment a business plan gets real.
Contribution margin ratio
The ratio (contribution ÷ price) tells you how much of every additional rupee of revenue drops through to cover fixed costs and then profit. A 40% ratio means a ₹10,000 marketing push must generate at least ₹25,000 of sales just to pay for itself.
Using the calculator well
Keep the period consistent: monthly fixed costs give a monthly break-even. Test price changes: raising price from ₹1,200 to ₹1,300 in the example cuts break-even from 1,000 to 833 orders, a 17% easier target from an 8% price rise, which is the leverage hidden in pricing. And if the tool warns that price is below variable cost, no volume can ever save the model; the unit economics must change first.
Worked example: an online store’s real break-even
A small D2C brand sells at ₹999 with product cost ₹380, packaging ₹40, shipping ₹90, payment gateway 2% (₹20) and marketplace commission 15% (₹150). Variable cost totals ₹680, so contribution is ₹319 per order. Against ₹3,00,000 of monthly fixed costs (salaries, rent, software, ads retainer), break-even is 941 orders a month. Founders routinely forget commission and gateway fees, count only the ₹380 product cost, and believe their break-even is 485 orders. The calculator forces every per-unit cost into one number and keeps the plan honest.
Margin of safety
Once you know break-even, compare it with actual sales. Selling 1,200 units against a 941-unit break-even gives a margin of safety of about 22%: sales can fall 22% before you slip into losses. Thin margins of safety argue for cutting fixed costs or raising prices before expanding; comfortable ones tell you how much you can spend on growth without endangering the base.
Frequently asked questions
What counts as a fixed vs variable cost?
Fixed costs stay the same whether you sell 10 units or 1,000: rent, salaries, software, insurance. Variable costs scale with each unit: materials, packaging, shipping, gateway fees, commission. Semi-variable costs like electricity can be split between the two.
My break-even seems impossibly high. What do I change?
You have three levers: raise price, cut variable cost per unit, or cut fixed costs. The calculator responds instantly to each, so test which lever moves your break-even most for the least pain. Small price increases usually have outsized effect.
Does break-even include my own salary?
It should. Pay yourself a realistic salary inside fixed costs; otherwise the business only "breaks even" by not paying you, which is a loss in disguise.
How do I use this for services instead of products?
Treat one billable hour or one project as the unit. Price is your rate, variable cost is subcontracting and tools per engagement, and fixed costs are your monthly overhead.