Break-Even Analysis Calculator

Determine exactly how many units you must sell and how much revenue you must generate before your business starts making a profit.

Total overhead expenses (rent, salaries, utilities, software licenses).

Direct manufacturing / acquisition / packaging cost per item.

Price charged to customer per item sold.

How it works

Break-even analysis calculates the point where total revenue equals total costs (both fixed and variable). Selling beyond the break-even point produces net operating profit, while falling below results in an operating loss.

Formula

Break-Even Units = (Fixed Costs / Price - Variable Cost)

Divides total fixed operating costs by the contribution margin of each unit sold to determine the exact sales volume needed to cover all expenses with zero net loss.

SymbolVariableUnitDescription
Fixed CostsOverhead operating expenses₹
PriceSelling price per unit₹
Variable CostDirect production cost per unit₹

Worked example

₹1,00,000 fixed costs, ₹40 variable cost, ₹100 sales price

Fixed Costs:
₹1,00,000
Variable Cost:
₹40
Sales Price:
₹100

Contribution Margin = ₹100 - ₹40 = ₹60 per unit (60% CM ratio). Break-even units = 1,00,000 / 60 = 1,667 units. Break-even revenue = 1,667 × ₹100 = ₹1,66,700.

Limitations

Assumes linear pricing without tiered volume discounts or economies of scale in variable production costs.

Frequently asked questions

What is a contribution margin?

Contribution margin is the portion of sales revenue remaining after paying variable costs (Price - Variable Cost). It represents the money generated per sale that contributes toward paying fixed overhead costs and generating profit.

How can a company lower its break-even point?

A business can lower its break-even point by increasing unit selling prices, reducing variable production costs (e.g. bulk raw material discounts), or cutting fixed operating expenses.

What is the Margin of Safety?

Margin of safety is the difference between actual (or projected) sales and the break-even sales level. It tells you how much sales can drop before the business incurs losses.

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Last reviewed: 2026-08-22.