Every business has a number that matters more than most metrics: how many units do you need to sell before you stop losing money?
About this calculator
Every business has a number that matters more than most metrics: how many units do you need to sell before you stop losing money? That is your break-even point. Below it, every month burns cash. Above it, you are profitable.
Fixed costs are what you pay regardless of sales volume: rent, salaries, software subscriptions, loan EMIs. Variable costs scale with output: raw materials, shipping, packaging, payment gateway fees, sales commissions. The difference between your selling price and variable cost per unit is the contribution margin, the amount each sale 'contributes' toward paying off fixed costs.
A restaurant with ₹3 lakh/month fixed costs selling meals at ₹400 with ₹200 in ingredients/labor per meal needs 1,500 meals/month to break even. That is about 50 meals a day. If the restaurant seats 30 and turns tables twice at lunch and dinner, 50 meals is achievable but tight. This kind of thinking is exactly what the calculator automates.
The margin of safety tells you how far above break-even your expected sales are. Higher margin of safety means the business can absorb demand drops without going into loss. Use alongside the [[margin]] calculator for pricing decisions and [[payback-period]] for startup investment recovery timelines.
Common uses
- D2C brand launching a new product at ₹999, wondering how many units cover the ₹5 lakh marketing spend
- Restaurant owner calculating daily covers needed to pay rent and staff
- SaaS startup with ₹15 lakh/month burn finding how many ₹2,000/month subscriptions reach profitability
- Freelancer considering hiring an assistant at ₹30K/month, calculating extra projects needed to justify the cost
- E-commerce seller evaluating whether a product at ₹1,200 with ₹800 landed cost is viable at 200 units/month
- Manufacturer deciding between two production methods with different fixed and variable cost structures
Frequently asked questions
What counts as a fixed cost?
Rent, salaries (if not commission-based), insurance, loan EMIs, software subscriptions, depreciation, and any expense that stays the same whether you sell 0 or 10,000 units. If it appears on your P&L every month regardless of revenue, it is fixed.
What counts as a variable cost?
Raw materials, packaging, shipping, payment gateway fees (2-3% of transaction), sales commissions, per-unit licensing, and anything that increases proportionally with each unit sold. If selling one more unit increases this cost, it is variable.
What is a good contribution margin?
It depends on the industry. Software/SaaS often has 80-90% margins (low variable cost). Manufacturing sits at 30-50%. Retail and e-commerce typically see 20-40%. A margin below 20% means you need very high volume to cover fixed costs, which is risky for small businesses.
How does break-even change with multiple products?
For multiple products, calculate a weighted-average contribution margin based on expected sales mix. If you sell 60% Product A (₹200 margin) and 40% Product B (₹100 margin), weighted CM is ₹160. Divide total fixed costs by ₹160 to get break-even in equivalent units.
What is margin of safety?
Margin of safety = (Expected Sales - Break-Even Sales) / Expected Sales x 100. It tells you how much sales can drop before you hit break-even. A 30% margin of safety means sales can fall 30% and you still cover costs. Below 15% is risky; above 40% is comfortable.
Can I use this for service businesses without 'units'?
Yes. Define a
How do I lower my break-even point?
Three ways: (1) reduce fixed costs (renegotiate rent, cut non-essential subscriptions), (2) reduce variable costs (bulk purchasing, better supplier deals), (3) raise selling price. Raising price by even 5-10% can dramatically reduce break-even volume without affecting demand much.
Should I include owner salary in fixed costs?
Yes, if you want the break-even to represent true profitability. Many founders exclude their own salary, which makes break-even look better on paper but means the business is not actually sustaining them. Include what you would need to pay a replacement for your role.