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The break-even point is where total revenue equals total costs — no profit, no loss. Each unit sold contributes its price minus its variable cost (the contribution margin) towards fixed costs. Once fixed costs are covered, every further unit adds its contribution margin to profit.
Use it to test prices, check whether a new product or shop can pay for itself, and set sales targets: add a target profit to see the sales needed to earn it.
| Fixed costs for the period (rent, salaries…) | 100000 |
| Selling price per unit | 500 |
| Variable cost per unit | 300 |
| Target profit (optional) | 0 |
| Break-even point (units) | 500 |
| Break-even sales | 250,000 |
| Contribution margin per unit | 200 |
| Contribution margin ratio | 40% |
| Units for target profit | 500 |
| Sales for target profit | 250,000 |
Break even at 500 units (250,000 of sales).
Try this example →| Fixed costs for the period (rent, salaries…) | 100000 |
| Selling price per unit | 500 |
| Variable cost per unit | 300 |
| Target profit (optional) | 50000 |
| Break-even point (units) | 500 |
| Break-even sales | 250,000 |
| Contribution margin per unit | 200 |
| Contribution margin ratio | 40% |
| Units for target profit | 750 |
| Sales for target profit | 375,000 |
750 units needed.
Try this example →Divide fixed costs by the contribution margin per unit (price − variable cost). ₹1,00,000 ÷ (₹500 − ₹300) = 500 units.
Selling price minus variable cost per unit — the amount each sale contributes to fixed costs and profit.
Fixed costs stay the same whatever you sell (rent, salaries, software). Variable costs rise with each unit (materials, packaging, commission, shipping).