Break-Even Calculator Guide: When Does Your Business Make Money?
Every business needs to know exactly how many units it must sell to cover costs. Break-even analysis is the essential first step in pricing, planning, and investment decisions.
Break-Even Formulas
Break-Even Units
Break-Even Revenue
Visualising Break-Even
Frequently Asked Questions
What is the break-even point?
The break-even point is the level of sales at which total revenue equals total costs — meaning zero profit and zero loss. Any sales above break-even generate profit; below it generates a loss. It is the minimum viable sales threshold for a business.
What is the break-even formula?
Break-Even Units = Fixed Costs ÷ (Selling Price − Variable Cost per unit). The denominator (Selling Price − Variable Cost) is called the Contribution Margin per unit. Example: Fixed costs ₹1,00,000, Price ₹500, Variable cost ₹300 → BEP = 1,00,000 ÷ 200 = 500 units.
What are fixed costs vs variable costs?
Fixed costs don't change with production volume — rent, salaries, insurance, equipment. Variable costs change with each unit produced — raw materials, packaging, shipping, per-unit labour. Semi-variable costs have both components (e.g., electricity has a fixed base plus variable usage).
What is break-even revenue?
Break-Even Revenue = Fixed Costs ÷ Contribution Margin Ratio. CM Ratio = (Price − Variable Cost) ÷ Price. Example: Fixed costs ₹1,00,000, CM Ratio = 40% → Break-even revenue = ₹1,00,000 ÷ 0.40 = ₹2,50,000.
How do I use break-even for pricing decisions?
If your break-even is 500 units and you realistically expect to sell 300, you need to either: (1) increase selling price to lower the break-even, (2) reduce fixed or variable costs, or (3) rethink the business model. Break-even analysis prevents launching unsustainable ventures.
Related Calculators
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Enter fixed costs, selling price, and variable cost to find your break-even units and revenue.
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