Break-Even Calculator

The break-even calculator tells a business how many units it has to sell before it stops losing money. Enter the fixed costs for the period, the selling price per unit and the variable cost per unit; the tool returns the break-even quantity and the revenue that goes with it.

How break-even is calculated

Every unit sold contributes the difference between its price and its variable cost towards the fixed costs. That difference is the contribution margin per unit. Break-even is reached when enough contributions have been collected to cover the fixed costs:

Break-even units = fixed costs ÷ (price per unit − variable cost per unit)

Break-even revenue = break-even units × price per unit

Fixed costs are the ones that do not move with volume for the period you are looking at: rent, salaries, insurance, software subscriptions, loan EMIs. Variable costs move with every unit: raw material, packaging, the per-order courier charge, payment-gateway fees, commission.

A worked example

A small bakery in Pune pays ₹60,000 a month in rent, salaries and utilities. A box of cookies sells for ₹250 and costs ₹130 in ingredients, packaging and delivery.

Item	Figure
Fixed costs per month	₹60,000
Price per box	₹250
Variable cost per box	₹130
Contribution per box	₹120
Break-even units	60,000 ÷ 120 = 500 boxes a month
Break-even revenue	500 × 250 = ₹1,25,000

Every box after the 500th adds ₹120 of profit. Sell 800 and the month ends ₹36,000 ahead; sell 400 and it ends ₹12,000 behind.

What the number is good for

• Pricing. Raise the price to ₹280 and break-even falls to 400 boxes; cut it to ₹220 for a promotion and it rises to 667.
• Cost decisions. A cheaper box that saves ₹10 per unit lowers break-even to 462.
• Capacity checks. If the oven can only produce 450 boxes a month, the business cannot break even at this price and cost structure, and that is better known before the lease is signed.
• Loan applications. Banks and investors ask for the break-even point because it shows how much the plan depends on volume.

Limits of the model

The formula assumes the price and the variable cost stay the same at every volume. In practice suppliers give discounts on bigger orders and you may have to discount to move the last units, so the real break-even is usually a range, not a single number. Use the profit margin calculator once you are past break-even to see how much of each extra rupee of sales you keep.