Break-Even Calculator
Calculate break-even point for your business
Cost & Pricing Details
How Break-Even Point is Calculated?
Break-even analysis is a critical financial tool that determines the sales volume or revenue needed to cover all costs (fixed and variable). At the break-even point, a business makes neither profit nor loss, making it essential for pricing decisions and business planning.
Break-Even Formula/Equation
Break-Even Units = Fixed Costs / (Price per Unit - Variable Cost per Unit)
Break-Even Revenue = Break-Even Units × Price per Unit
Contribution Margin = Price per Unit - Variable Cost per Unit
Where:
- Fixed Costs = Costs that don't change with production volume (rent, salaries, insurance)
- Variable Cost per Unit = Cost that varies with each unit produced (materials, labor per unit)
- Price per Unit = Selling price of one unit
- Contribution Margin = Amount available to cover fixed costs and generate profit
Example:
Let's calculate the break-even point for a business with fixed costs of ₹1,00,000, variable cost of ₹50 per unit, and selling price of ₹100 per unit.
Given: Fixed Costs = ₹1,00,000, Variable Cost = ₹50/unit, Price = ₹100/unit
Step 1: Calculate Contribution Margin
Contribution Margin = Price - Variable Cost
Contribution Margin = ₹100 - ₹50 = ₹50
Step 2: Calculate Break-Even Units
Break-Even Units = Fixed Costs / Contribution Margin
Break-Even Units = ₹1,00,000 / ₹50
Break-Even Units = 2,000 units
Step 3: Calculate Break-Even Revenue
Break-Even Revenue = 2,000 × ₹100
Break-Even Revenue = ₹2,00,000
Result: You need to sell 2,000 units (or generate ₹2,00,000 in revenue) to break even. Any sales above this point generate profit.
Use Cases for Break-Even Calculator
Business Planning
Determine minimum sales required to cover costs
Pricing Strategy
Set optimal prices based on cost structure
Profit Planning
Plan sales targets to achieve desired profit levels
Cost Management
Evaluate impact of fixed and variable cost changes
Benefits of Using Our Break-Even Calculator
Understand minimum sales requirements
Make informed pricing decisions
Evaluate business viability and profitability
Visualize break-even with interactive charts
100% free, no registration required
Mobile-friendly design
Break-Even Calculator FAQs
❓What is break-even point?
Break-even point is the sales volume or revenue at which total revenue equals total costs (fixed + variable). At this point, the business makes neither profit nor loss. It's a critical metric for understanding business viability.
❓How is break-even point calculated?
Break-even point in units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Break-even point in revenue = Break-even Units × Selling Price per Unit. This formula helps determine how many units need to be sold to cover all costs.
❓What is contribution margin?
Contribution margin is the difference between selling price per unit and variable cost per unit. It represents the amount available to cover fixed costs and generate profit. Higher contribution margin means fewer units needed to break even.
❓Why is break-even analysis important?
Break-even analysis helps businesses understand minimum sales requirements, set pricing strategies, evaluate business viability, plan for profitability, and make informed decisions about fixed and variable costs.
❓Is this calculator free to use?
Yes, this break-even calculator is completely free to use with no registration required.