How this calculator works
Break-even is the sales level where you neither make nor lose money. Every unit above it adds its contribution to profit; every unit below it eats into fixed costs.
Fixed costs are what you pay regardless of sales, such as rent and salaries. Variable costs rise with every unit, such as materials, packing, shipping and commission.
Formula
Worked example
A small bakery sells hampers at ₹1,200 with ₹700 of variable cost. Each hamper contributes ₹500. With ₹4.5 lakh of monthly fixed costs it needs 900 hampers to break even. At the expected 1,200 it makes ₹1.5 lakh, and sales can fall 25% before it slips into a loss.
Things to watch
- Put marketing in fixed costs if it is a monthly budget, and in variable costs if it is a cost per order.
- Run the numbers at a 10% lower price. Discounts cut contribution far more than they cut revenue.
- If break-even is above what your capacity can produce, the plan does not work at any volume.
Questions
What is contribution margin?
The share of each sale left after variable costs, available to pay fixed costs and then profit. A ₹1,200 product with ₹700 variable cost has a 41.7% contribution margin.
Is break-even the same as payback?
No. Break-even is a monthly sales level. Payback is how long it takes to recover an upfront investment.
How do I handle several products?
Use a weighted average price and variable cost based on your sales mix, or run the calculator for each product with its share of fixed costs.
Does GST count as revenue?
No. Use prices and costs before GST, because GST collected is passed on to the government.
For planning and education only, not tax, legal or investment advice. Last reviewed 2026-10-31.