Break-even Calculator

## What is the Break-even Calculator? The Break-even Calculator determines the revenue level at which your business neither makes a profit nor a loss — your break-even point. Above this revenue, every rupee contributes to profit; below it, every rupee represents a loss. ## Formula Used Break-even Units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit) Break-even Revenue = Fixed Costs / Contribution Margin Ratio Where: Contribution Margin = Selling Price - Variable Cost Contribution Margin Ratio = Contribution Margin / Selling Price ## Worked Example Fixed costs: Rs 1,00,000/month, Selling price: Rs 500/unit, Variable cost: Rs 300/unit Contribution margin = Rs 500 - Rs 300 = Rs 200/unit Contribution margin ratio = Rs 200 / Rs 500 = 40% Break-even units = Rs 1,00,000 / Rs 200 = 500 units/month Break-even revenue = Rs 1,00,000 / 0.40 = Rs 2,50,000/month ## Frequently Asked Questions 1. How do I calculate my business break-even point? Break-even units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). For example, if fixed costs are Rs 1 lakh/month, selling price is Rs 500/unit, and variable cost is Rs 300/unit, break-even = 1,00,000 / (500 - 300) = 500 units/month. 2. What are fixed and variable costs in a business? Fixed costs (overhead) do not change with sales volume — rent, salaries, insurance, office supplies, interest payments. Variable costs change directly with production/sales — raw materials, packaging, shipping, commissions, electricity for production machinery. 3. How can I lower my break-even point? Ways to lower break-even: (1) Reduce fixed costs — renegotiate rent, reduce salaries, move to smaller premises; (2) Increase selling price — test price increases if your value proposition supports it; (3) Reduce variable costs — improve supplier terms, reduce waste, increase efficiency. 4. What is contribution margin and why is it important? Contribution margin = Selling Price - Variable Cost. It is the amount each unit sold contributes toward covering fixed costs (and eventually profit). A higher contribution margin means you need fewer units to break even. 5. Should my break-even be a long-term or short-term target? Use break-even as both. Short-term: use it to set monthly sales targets and track operational efficiency. Long-term: use it to evaluate business models — a business with a very high break-even needs significant scale to be viable.