Break-Even Calculator — When Does Your Business Start Making Money?
Calculate your break-even point in units and revenue. Know exactly how much you need to sell before your business stops losing money.
Before you spend months building a business, you should know: how many customers or units do you need to cover your costs? The break-even point is that number — and it's one of the most clarifying calculations in business finance. The CalcHub Break-Even Calculator gives you break-even in both units and revenue, plus a margin of safety analysis.
The Formulas
Break-Even Units = Fixed Costs / (Selling Price − Variable Cost per Unit) Break-Even Revenue = Fixed Costs / Gross Margin % Contribution Margin = Selling Price − Variable Cost per UnitThe contribution margin is what each unit "contributes" toward covering fixed costs. Once fixed costs are covered, every additional unit sold is pure profit at the contribution margin rate.
A Simple Product Example
A candle maker:
- Selling price: ₹450 per candle
- Variable cost (wax, wick, jar, packaging): ₹180 per candle
- Monthly fixed costs (rent, equipment, utilities): ₹54,000
Contribution margin = ₹450 − ₹180 = ₹270
Break-even units = ₹54,000 / ₹270 = 200 candles per month
Break-even revenue = 200 × ₹450 = ₹90,000/month
Sell fewer than 200 candles and you're losing money. Sell 300 and your profit is: (300 − 200) × ₹270 = ₹27,000.
Fixed vs Variable Costs — Getting It Right
| Fixed Costs (don't change with volume) | Variable Costs (scale with units) |
|---|---|
| Rent and office space | Raw materials |
| Salaries of permanent staff | Packaging |
| Software subscriptions | Shipping and fulfillment |
| Loan repayments | Sales commissions |
| Insurance | Payment processing fees |
| Marketing retainers | Customer support (if per-ticket) |
Break-Even for Service Businesses
Service businesses often have very low variable costs and high fixed costs. A digital marketing agency:
- Monthly fixed costs: ₹6,00,000 (team salaries, tools, office)
- Average monthly retainer per client: ₹40,000
- Variable cost per client (freelancer support, ad account tools): ₹8,000
- Contribution margin per client: ₹32,000
Margin of Safety
Once you know break-even, calculate your margin of safety:
Margin of Safety = (Current Revenue − Break-Even Revenue) / Current Revenue × 100A business doing ₹1,50,000/month with a ₹90,000 break-even has a 40% margin of safety. Revenue can fall 40% before losses begin. Healthy businesses target 20–40%+ margin of safety.
How to Use the Calculator
- Enter fixed costs (monthly)
- Enter selling price and variable cost per unit
- Get break-even in units and revenue
- Optionally enter current sales volume to see margin of safety and current profit
How does break-even change if I raise prices?
Raising price while keeping variable costs and fixed costs constant always lowers the break-even point — because contribution margin increases. A ₹50 price increase on a ₹500 product with ₹200 variable cost improves contribution margin by 20% (₹300 → ₹350) and reduces break-even units proportionally.
Can a business have multiple break-even points for different products?
Yes — this is called a weighted average contribution margin analysis. If you sell multiple products with different margins, break-even depends on the mix of products sold. A shift toward lower-margin products raises the break-even point even if total revenue stays constant.
Is break-even the same as profitability?
Break-even means you've covered all costs — fixed and variable — so you're at zero profit, not loss. True profitability includes a return on invested capital and owner compensation beyond costs. Break-even is the floor; profitability goals set the ceiling you're working toward.