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Break-even calculator: units and revenue to cover costs
The break-even point is where revenue exactly covers costs: below it the business loses money, above it every extra sale adds profit. Knowing it tells you how much you need to sell before the business pays for itself.
- Units to break even
- 2,500
- Revenue needed
- ₹12,50,000
- Contribution per unit
- ₹200
- Contribution margin
- 40%
The formula
Break-even units = fixed costs ÷ (price per unit − variable cost per unit). The difference between price and variable cost is the contribution margin: what each sale contributes to fixed costs.
Example: with ₹5 lakh of monthly fixed costs, a ₹500 price and ₹300 of variable cost per unit, each sale contributes ₹200 (a 40% contribution margin). Break-even is 5,00,000 ÷ 200 = 2,500 units a month, or ₹12.5 lakh of revenue. To make ₹1 lakh of profit, add it to fixed costs: 3,000 units.
How to use it
- Test pricing: a higher price lowers the units needed, if demand holds.
- Spot loss-making products: if variable cost exceeds price, no volume will ever break even.
- Plan hiring: each new fixed cost raises the break-even point; see how many extra sales it needs.
Limits
Real costs are rarely perfectly fixed or variable, prices change with discounts, and the mix of products matters. Use the result as a planning guide and update it as your numbers change.
Break-even for a subscription business
For software or subscription businesses, think in customers rather than units. Divide monthly fixed costs by the monthly gross profit per customer: with ₹10 lakh of fixed costs and customers paying ₹2,000 a month at an 80% gross margin, you need 10,00,000 ÷ 1,600 = 625 paying customers to break even, before counting the cost of acquiring them.
Break-even also moves over time. Hiring raises fixed costs, while better pricing or cheaper delivery raises the contribution per sale. Recalculate whenever either changes, and watch whether the break-even point is getting closer or further away as the company grows.
Related reading: Unit economics and the LTV:CAC ratio, with a calculator and Startup funding stages: pre-seed to Series C, explained.
Frequently asked questions
- What are fixed and variable costs?
- Fixed costs stay the same whatever you sell (rent, salaries, software). Variable costs rise with each sale (materials, delivery, payment fees).
- How is break-even different from runway?
- Break-even is the sales level at which you stop losing money; runway is how long your cash lasts until then.
- What is a contribution margin?
- Price minus variable cost per unit, often shown as a percentage of price. It is the share of each sale left to pay fixed costs and then make profit.
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All calculators →Results are estimates for planning and learning, based only on the numbers you enter. They are not financial, tax or investment advice.