PocketBreak-Even Calculator
Determine the sales volume required to cover your fixed and variable operational costs. Visualize the contribution margins easily.
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Rent, salaries, software overheads
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Retail price of one product unit
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Materials, raw labor, shipping cost
Break-Even Sales Units
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Break-Even Sales Revenue
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Contribution Margin per Unit
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Break-Even Calculation Formula
The break-even point is reached when total revenue equals total costs:
- Contribution Margin per Unit: Selling Price - Variable Cost
- Break-Even Units: Fixed Costs / Contribution Margin
- Break-Even Sales Revenue: Break-Even Units × Selling Price
Worked Example
If your business has annual fixed costs of ₹5,00,000, sells a product for ₹100, and raw materials cost ₹60 per unit:
- Contribution Margin: ₹100 - ₹60 = ₹40 per unit
- Break-Even Units: 5,00,000 / 40 = 12,500 units
- Break-Even Sales Revenue: 12,500 units × ₹100 = ₹12,50,000
Frequently Asked Questions
What is fixed cost?
Fixed costs are expenses that do not change with the volume of products sold or manufactured, such as office rent, permanent staff salaries, software licensing fees, and business insurance.
What is variable cost?
Variable costs are expenses that change in direct proportion to production volume, such as raw materials, packaging, transaction processing fees, and product shipping charges.
What does contribution margin represent?
Contribution margin is the selling price minus the variable cost. It shows how much money from every unit sold contributes towards covering your fixed overheads.
What happens if variable cost exceeds selling price?
If variable cost is higher than the selling price, the business loses money on every unit sold. A break-even point is impossible to reach in this scenario.
Why is break-even analysis useful?
It helps entrepreneurs test viability, evaluate product pricing strategy, and determine minimum sales targets before launching a business.