Break-Even Calculator

When this applies

• You are pricing a product and want to know the volume it takes to be viable.
• You are deciding whether a fixed cost, such as a new hire or premises, is affordable.
• You are comparing two products with different margins.
• You want to know how far sales can fall before you make a loss.

Fixed costs INR 5,00,000, price INR 1,000, variable cost INR 600

1. 1Contribution per unit = 1,000 - 600 = INR 400.
2. 2Break-even units = 5,00,000 / 400 = 1,250 units.
3. 3Break-even revenue = 1,250 x 1,000 = INR 12,50,000.

1,250 units, or INR 12,50,000 of revenue, to break even.

What this calculator does

Work out how many units you need to sell to cover your costs, and the revenue that represents. Enter fixed costs, the selling price and the variable cost per unit.

How this is calculated

Each sale contributes the selling price minus the variable cost of making it. That contribution first covers the fixed costs, which do not change with volume. Break-even units is fixed costs divided by the contribution per unit, and break-even revenue is that many units at the selling price. Below the break-even point the business makes a loss; above it, every extra unit adds the contribution to profit.

The formula

Contribution = price − variable cost · Break-even units = fixed cost ÷ contribution

Common mistakes to avoid

• Ignoring a negative contribution

  If the variable cost is at or above the price, no volume breaks even. The calculator returns zero units rather than a false answer.

• Leaving costs out of the variable figure

  Freight, packaging and payment fees belong in the variable cost. Omitting them makes the break-even look easier than it is.

• Assuming fixed costs stay fixed

  Fixed costs step up as you scale - more space, more staff. The break-even moves with them.

Frequently asked

What is the break-even point?

The sales volume at which total revenue equals total cost, so there is neither profit nor loss. Every unit beyond it adds the contribution per unit to profit.

What is the contribution per unit?

Selling price minus variable cost per unit. It is what each sale leaves towards covering fixed costs and then towards profit.

What counts as a fixed cost?

Costs that do not change with the number of units sold - rent, salaries, subscriptions. Variable costs change with each unit, such as materials and packaging.

Why is my break-even so high?

A thin contribution per unit means many sales are needed to cover the fixed costs. Raising the price or cutting the variable cost raises the contribution and lowers the break-even.

Does it account for tax?

No. This is an operating break-even before tax. Income tax is charged on profit and does not change the break-even volume.