Small Business Break-Even Calculator
Find the monthly sales you need before your business starts making money.
Break-even is the sales level at which a business stops losing money. Below it, every month drains cash; above it, each additional sale adds profit. This calculator finds that point in units, revenue and daily sales, and shows how much cushion you currently have.
Costs and pricing
Result
Fill in the fields above and your result will appear here.
What the Small Business Break-Even Calculator does
The logic rests on separating two kinds of cost. Fixed costs — rent, salaries, licences, EMIs — are the same whether you sell one unit or a thousand. Variable costs — material, packaging, commission — occur only when you make a sale.
The difference between price and variable cost is contribution: the amount each sale contributes towards paying the fixed costs. Divide fixed costs by contribution and you have the number of sales needed before the business turns profitable.
How to use this tool
- List every monthly fixed cost. Include your own drawings if you take a fixed amount, and any loan EMI.
- Enter your average selling price per unit. For a business with many products, use the average order value.
- Enter the variable cost of one unit — material, packaging, payment gateway charges and any per-sale commission.
- Enter your current monthly sales to see your margin of safety.
- Set a target profit to find the sales level that delivers it.
Formula and method
Contribution per unit = Selling price − Variable cost
Contribution margin = Contribution ÷ Selling price × 100
Break-even units = Fixed costs ÷ Contribution per unit
Break-even revenue = Break-even units × Selling price
Units for target profit = (Fixed costs + Target profit) ÷ Contribution
Margin of safety = (Current sales − Break-even) ÷ Current sales × 100
Worked example
Example: a shop with ₹1,60,000 of fixed costs
| Selling price | ₹500 |
| Variable cost | ₹280 |
| Contribution per unit | ₹220 (44%) |
| Break-even units | 728 per month |
| Break-even revenue | ₹3,63,636 |
At 600 units a month the shop is 128 units short and loses ₹28,000. Reaching 900 units would produce ₹38,000 of profit — the swing from loss to profit happens over a narrow band of volume.
What your result means
Break-even units is the number to put on the wall. Everything below it is survival; everything above it is progress.
Contribution margin determines how sensitive the business is. At 50% you cover fixed costs quickly; at 15% you need very high volume and any cost increase is dangerous.
Margin of safety is the buffer. Above 30% the business can absorb a bad quarter; below 15% it cannot.
Important considerations
- Classify costs carefully. A delivery person on a fixed salary is a fixed cost; per-delivery charges are variable. Getting this wrong distorts the whole calculation.
- Your own salary should be in fixed costs. A business that only breaks even because the owner works unpaid is not breaking even.
- Seasonal businesses should calculate break-even annually as well as monthly, since fixed costs continue through the quiet months.
- Raising price improves contribution far faster than cutting variable cost, provided volume holds. A 10% price rise on a 44% margin adds more profit than a 10% material saving.
- If you sell several products with different margins, run the calculation on the weighted average — or separately for each product line.
Limitations of this tool
- It assumes a single average price and variable cost. Businesses with a wide product mix should treat the result as an approximation.
- It does not model capacity limits, so it may suggest a break-even volume your premises or staff cannot physically deliver.
- Credit sales are treated as revenue when sold. If customers pay late, the cash position will be worse than the profit figure suggests.
Frequently asked questions
What is a good contribution margin?
It depends on the business. Retail commonly runs 20–40%, services 50–70%, restaurants 60–70% on food cost alone. What matters more than the level is whether it covers your fixed costs at achievable volume.
Should my own salary be a fixed cost?
Yes. If you do not pay yourself, the business appears profitable while your labour subsidises it. Include a realistic market salary for the work you do.
How do I calculate break-even for a service business?
Use a billable hour or a standard job as the unit. Price is the fee per job, variable cost is anything spent specifically on that job, and your time sits in fixed costs as a salary.
Why does a small price increase change break-even so much?
Because the increase goes almost entirely into contribution. Raising price from ₹500 to ₹550 lifts contribution from ₹220 to ₹270, cutting break-even by nearly a fifth without any change in cost.