Break-Even Point Calculator

Find out exactly how many sales you need to start making a profit.

Input Details
Rent, salaries, insurance, etc.
Raw materials, labor per item, etc.
Final price you sell at.
Break-Even Point (Units)

167

Units must be sold to cover all costs.

Break-Even Sales ₹ 83,333
Contribution Margin ₹ 300

Break-Even Analysis — Formulas & Concepts

BEP in Units
Fixed Costs ÷ Contribution Margin

How many units you must sell to break even.

BEP in Sales (₹)
Fixed Costs ÷ CM Ratio

Revenue needed to cover all costs. CM Ratio = CM ÷ Price.

Contribution Margin
Price − Variable Cost

Profit contribution per unit sold toward fixed costs.

Worked Example

A retail business sells handmade bags:

Fixed Costs (rent + salary)₹1,00,000/month
Variable Cost per bag₹600
Selling Price per bag₹1,000
Contribution Margin₹400/bag
Break-Even Point

250 Bags / Month

= ₹2,50,000 in monthly revenue

Every bag sold beyond 250 contributes ₹400 directly to profit.

Profit / Loss at Different Sales Volumes

Using the example above — at Fixed Cost ₹1L, Variable ₹600, Price ₹1,000:

Units SoldRevenueTotal CostProfit / LossStatus
100 units₹1,00,000₹1,60,000−₹60,000Loss
150 units₹1,50,000₹1,90,000−₹40,000Loss
200 units₹2,00,000₹2,20,000−₹20,000Loss
250 units ★₹2,50,000₹2,50,000₹0Break-Even
300 units₹3,00,000₹2,80,000+₹20,000Profit
400 units₹4,00,000₹3,40,000+₹60,000Profit
500 units₹5,00,000₹4,00,000+₹1,00,000Profit

Typical Contribution Margins by Industry

Contribution Margin Ratio = (Price − Variable Cost) ÷ Price

IndustryTypical CM RatioNote
Software / SaaS70–90%Low variable cost per sale
Professional Services50–75%Labour is partly fixed
Manufacturing25–45%High raw material cost
Retail / Trading20–40%Thin margins, volume play
Restaurants / Food30–50%Food cost 30–40% of price
E-commerce10–25%Logistics + returns reduce CM

5 Ways to Lower Your Break-Even Point

1
Cut Fixed Costs

Renegotiate rent, switch to co-working, outsource non-core functions. Every ₹10,000 cut in fixed costs reduces BEP by 10,000 ÷ Contribution Margin units.

2
Reduce Variable Cost per Unit

Bulk purchase discounts, better supplier negotiation, process automation. This directly widens the contribution margin.

3
Increase Selling Price

Even a 5-10% price increase with minimal customer loss can dramatically cut BEP. Improve perceived value, add features, build brand.

4
Add a Higher-Margin Product

Bundle premium versions or add-on services with higher contribution margins to shift your overall product mix.

5
Focus on Volume Above BEP

Once fixed costs are covered, every additional unit sold is nearly pure profit. Sales incentives and digital marketing pay off most above the break-even line.

Frequently Asked Questions

The break-even point (BEP) is the exact number of units (or revenue amount) at which your total sales revenue equals total costs (fixed + variable). At BEP, profit = 0. Every unit sold beyond BEP contributes directly to profit.

BEP (Units) = Fixed Costs ÷ (Selling Price per Unit − Variable Cost per Unit). The denominator is the Contribution Margin. Example: Fixed Costs = ₹1,00,000, Price = ₹1,000, Variable Cost = ₹600 → BEP = 1,00,000 ÷ 400 = 250 units.

Contribution Margin (CM) = Selling Price − Variable Cost per unit. It tells you how much each sale contributes toward covering fixed costs. A higher CM means you reach break-even faster. CM Ratio = CM ÷ Selling Price — useful for comparing products or services.

Fixed costs don't change with production volume — rent, salaries, insurance, software subscriptions. Variable costs scale with output — raw materials, packaging, shipping, sales commissions. Break-even analysis requires accurately separating these two types.

BEP in Sales (₹) = Fixed Costs ÷ Contribution Margin Ratio. CM Ratio = (Price − Variable Cost) ÷ Price. Example: Fixed ₹1L, CM Ratio = 400/1000 = 0.40 → BEP Sales = 1,00,000 ÷ 0.40 = ₹2,50,000/month revenue.

Margin of Safety = Actual Sales − Break-Even Sales. It tells you how far your current sales are above break-even — a buffer before you start losing money. Margin of Safety % = (Actual Sales − BEP Sales) ÷ Actual Sales × 100. Higher is safer.

For startups and MSMEs, BEP analysis is essential to: (1) Set minimum sales targets, (2) Decide whether a product/service is viable, (3) Justify pricing to investors, (4) Plan how much capital is needed to sustain losses until break-even, (5) Compare impact of different pricing strategies.

Reduce BEP by: (1) Cutting fixed costs — negotiate rent, outsource non-core work, (2) Reducing variable costs — bulk buying, better suppliers, (3) Increasing selling price — add premium tiers, improve branding, (4) Improving product mix — focus on higher-margin products. Even small improvements compound.
Reviewed 9 September 2026 Use these quick actions with the result shown on this page.

Transparent calculation

Business formula and assumptions

MethodBreak-even units = fixed costs ÷ (selling price per unit − variable cost per unit)
  1. Enter values from the same accounting period.
  2. Review the formula and calculated result.
  3. Compare scenarios and validate decisions against complete financial records.

Important assumption: The output is a planning estimate and does not replace complete accounts, valuation or professional advice.

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Break-Even Calculator result BharatERP PRO

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