How to use the Break-even Calculator
- Add up monthly fixed costs: rent, salaries, loan EMIs, subscriptions, utilities.
- Enter the selling price and the variable cost of each unit (materials, packaging, commission, delivery).
- Optionally enter a monthly profit target.
Formula
Contribution per unit = Selling price − Variable cost per unit
Break-even units = Fixed costs ÷ Contribution per unit
Units for a target = (Fixed costs + Target profit) ÷ Contribution per unit
Contribution is the key number
Each sale contributes its price minus its variable cost towards fixed costs. Once enough contribution has covered the fixed costs, every further sale adds that contribution to profit. Raising the price, cutting variable costs or reducing fixed costs all lower the break-even point.
Worked example
Fixed costs ₹60,000/month, price ₹500, variable cost ₹300
- Contribution = 500 − 300 = ₹200 per unit
- Break-even = 60,000 ÷ 200 = 300 units (₹1,50,000 sales)
- For ₹20,000 profit: (60,000 + 20,000) ÷ 200 = 400 units
Break even at 300 units; 400 units for ₹20,000 profit
Important notes
- Units are rounded up — you can't sell a fraction of a unit.
- Use prices and costs excluding GST if you're registered.
Frequently asked questions
What costs are fixed and what are variable?
Fixed costs stay the same whatever you sell in a month (rent, salaries). Variable costs rise with each unit sold (materials, packaging, per-order delivery and commission).
What if I sell many products?
Use an average price and average variable cost weighted by your sales mix, or calculate break-even for each product line.