How is the break-even point calculated?

Break-even units = fixed costs ÷ (selling price per unit − variable cost per unit). The denominator is the contribution per unit, the amount each sale contributes toward fixed costs. Break-even revenue is break-even units × price, or fixed costs ÷ contribution margin ratio.

What counts as a fixed cost?

Costs that do not change with volume over the period: rent, salaries, insurance, loan interest, software subscriptions, depreciation. Variable costs change with each unit: raw material, packaging, payment gateway fees, per-unit shipping, sales commission.

What is contribution margin?

Price minus variable cost, either per unit or as a percentage of price. A 40 percent contribution margin means 40 paise of every rupee of sales is available to cover fixed costs and then profit. It is the single most useful number for pricing decisions.

What is margin of safety?

How far actual or planned sales are above break-even, as units, rupees or a percentage. A margin of safety of 20 percent means sales can fall 20 percent before the business starts losing money. The calculator shows it if you enter expected sales.

How do I use this for a target profit?

Enter the profit you want in the target-profit field. The calculator adds it to fixed costs, so the result is the units and revenue needed to reach that profit rather than just to break even.

Break-Even Calculator

How many units, and how much revenue, you need to cover fixed costs or reach a target profit.

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Fixed costs for the period (₹)

₹

Price per unit (₹)

₹

Variable cost / unit (₹)

₹

Target profit, optional (₹)

₹

Expected sales, optional (units)

Break-even point

Contribution per unitprice − variable cost

₹ 0.00

Contribution margin

0.0%

Break-even units

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Break-even revenue

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Illustrative only. Assumes a constant price and variable cost per unit and fixed costs that do not change across the volume range.

How it works

Contribution

Each unit's price less its variable cost is what it contributes to fixed costs.

Break-even

Fixed costs divided by contribution per unit. Add a target profit to fixed costs to plan for it.

Margin of safety

How far expected sales sit above break-even, as a percentage.

Know the volume that turns the business profitable

Every business has a sales level below which it loses money. Enter fixed costs, price and variable cost per unit and the calculator gives that level in units and rupees, the contribution margin that drives it, and, if you add expected sales, how much headroom you have. Useful for pricing, for deciding whether a new fixed cost is affordable, and for lender conversations.

Target profit

Treat the profit you want as another fixed cost and solve for it.

Margin of safety

The percentage drop in sales you can absorb before losses start.

Negative contribution

Flagged explicitly; no volume fixes a product that loses on every unit.

Any period

Use monthly fixed costs for a monthly answer, annual for annual.