Break-Even Calculator
Find how many units you must sell to break even from fixed costs, price and variable cost per unit.
Formula last reviewed 4 August 2026 · How we verify our calculators
Units to break even
- Contribution margin / unit
- ₹200
- Revenue at break-even
- ₹1,25,000
Updates live as you type
Frequently asked questions
It is the sales level at which total revenue equals total cost, so profit is zero. Beyond it, each additional unit adds profit; below it, you make a loss.
It is the selling price minus the variable cost per unit — the amount each sale contributes toward covering fixed costs. Break-even units = fixed costs ÷ contribution margin.
A higher price increases the contribution margin per unit, so fewer units are needed to cover the same fixed costs.
Then you can never break even — each sale fails to cover its own variable cost. You must raise the price or cut variable costs first.
Two hundred and fifty units before you earn anything
With ₹50,000 of fixed costs, a price of ₹500 per unit and a variable cost of ₹300, the break-even point is 250 units — ₹1,25,000 of revenue. The contribution margin is ₹200 per unit.
Below 250 units the business loses money. Above it, every additional unit contributes ₹200 straight to profit.
The calculation
Contribution margin per unit = price − variable cost = 500 − 300 = ₹200
Break-even units = fixed costs ÷ contribution margin = 50,000 ÷ 200 = 250
Break-even revenue = break-even units × price = 250 × 500 = ₹1,25,000
The logic: each unit sold contributes ₹200 towards covering fixed costs. Once enough units have been sold to cover all ₹50,000, the fixed costs are paid and subsequent contribution becomes profit.
Fixed versus variable, and where the line blurs
Fixed costs do not change with volume — rent, salaries, insurance, software subscriptions, depreciation, loan interest.
Variable costs scale directly with each unit — raw materials, direct labour if paid per unit, packaging, shipping, payment-gateway fees, sales commission.
The distinction is less clean in practice than in textbooks. Semi-variable costs have both components: a phone plan with a fixed rental and per-use charges, or electricity with a fixed connection charge and consumption-based billing. Split them rather than forcing them into one category.
Step costs are fixed until a threshold and then jump — one supervisor handles up to ten staff, then a second is needed. Break-even analysis assumes linearity and breaks down across a step, so recompute on each side of one.
What the model is useful for
Pricing decisions. Raising the price to ₹550 lifts contribution to ₹250 and drops break-even to 200 units — a 20% reduction in the volume needed, from a 10% price rise. Price changes move break-even far more than most people expect.
Cost decisions. Cutting fixed costs to ₹40,000 drops break-even to 200 units as well. Cutting variable cost to ₹280 lifts contribution to ₹220 and drops break-even to 228.
Target profit. To earn ₹30,000 of profit, treat it as an additional fixed cost: (50,000 + 30,000) ÷ 200 = 400 units.
Margin of safety — how far sales can fall before you are in loss. Selling 350 units against a break-even of 250 gives a margin of safety of 100 units, or 28.6%.
Where the model's assumptions bite
Break-even analysis assumes a constant price and constant variable cost across all volumes. Reality usually contradicts both: selling more often requires discounting, while buying more materials often earns bulk discounts. The two effects work in opposite directions and partly cancel, but neither is captured.
It also assumes everything produced is sold, ignoring inventory, and works cleanly only for a single product. For a multi-product business, break-even must be computed on a weighted-average contribution margin across the expected sales mix — and it changes whenever the mix does.
Reading the result
The unit figure is the more useful of the two, because it is something you can plan sales activity against. The revenue figure matters for cash-flow planning and for conversations with lenders.
Remember that break-even is about profit, not cash. A business can be past break-even on paper and still run out of money if customers pay in 90 days while suppliers demand 30. Break-even analysis and cash-flow forecasting answer different questions, and a young business needs both.
Common mistakes
Misclassifying semi-variable costs. Split them into their fixed and variable parts.
Assuming linearity across a step cost. Recompute either side.
Forgetting owner salary. If you need to be paid, it is a fixed cost.
Using a single product's figures for a multi-product business. Weight by sales mix.
Treating break-even as solvency. Cash timing can sink a profitable business.