This free break-even calculator tells you exactly how many units you must sell before you start making money. Enter your fixed costs, the selling price per unit and the variable cost per unit, and it instantly returns your break-even point in units and revenue, your contribution margin per unit, the contribution-margin ratio, and the number of units you need to reach a target profit. It works equally well as a break-even point calculator, a contribution margin calculator and a quick break-even analysis tool for any product or job.
How to calculate the break-even point
The break-even point is the level of sales at which total revenue exactly equals total costs — you make neither a profit nor a loss. The core formula is simple:
- Break-even point (units) =
fixed costs ÷ (selling price − variable cost per unit) - Break-even revenue =
break-even units × selling price
The denominator, price − variable cost, is the contribution margin per unit. Worked example: suppose your fixed costs (rent, salaries, machine overhead) are ₹2,00,000 per month, you sell each unit for ₹500, and each unit costs ₹300 in materials, power and direct labour. The contribution margin is ₹500 − ₹300 = ₹200 per unit. So the break-even point is ₹2,00,000 ÷ ₹200 = 1,000 units, and the break-even revenue is 1,000 × ₹500 = ₹5,00,000. Sell the 1,001st unit and you finally start earning ₹200 of profit on every additional unit.
Contribution margin explained
The contribution margin is the single most important number in break-even analysis. It is what each unit "contributes" toward your fixed costs after its own variable costs are paid. Expressed as a percentage of price, it becomes the contribution margin ratio: in the example above, ₹200 ÷ ₹500 = 40%. That means 40 paise of every rupee of sales is available to cover fixed costs and, once they are covered, becomes profit.
The higher your contribution margin, the fewer units you need to break even, and the faster profit accelerates afterwards. This is why a low contribution margin is dangerous even with strong sales: most of each rupee is being eaten by variable costs, leaving little to recover overhead. If your contribution margin is zero or negative — the variable cost equals or exceeds the price — you can never break even, no matter how many units you sell, because every sale loses money. The calculator flags this case so you fix the price or cost before you scale.
Break-even with a target profit
Breaking even is the floor, not the goal. To find how many units you must sell to hit a specific profit target, simply treat the desired profit as an extra fixed cost to cover:
- Units for target profit =
(fixed costs + target profit) ÷ contribution margin per unit
Continuing the example, if you want ₹1,00,000 of monthly profit on top of recovering your ₹2,00,000 of fixed costs, you need (₹2,00,000 + ₹1,00,000) ÷ ₹200 = 1,500 units. The calculator updates this figure the moment you enter a target profit, so you can sanity-check whether your sales pipeline can realistically reach it — and how a price increase or a cost reduction shifts the number.
Break-even reference
A quick map of the terms and formulas used by this calculator.
| Term | Formula | What it tells you |
|---|---|---|
| Contribution margin / unit | price − variable cost | Rupees each unit adds toward fixed costs & profit. |
| Contribution margin ratio | contribution margin ÷ price | Share of every sale available to cover overhead. |
| Break-even units | fixed costs ÷ contribution margin | Units to sell before you make any profit. |
| Break-even revenue | break-even units × price | Sales value at the break-even point. |
| Units for target profit | (fixed costs + target) ÷ contribution margin | Units needed to reach a chosen profit. |
From break-even to live costing
A break-even calculator answers a single, static question with numbers you type in by hand. Running a manufacturing business means those numbers move every day — material prices change, scrap varies, overhead is spread across many products, and a "variable cost per unit" is really a bill of materials plus routing plus power. Inside OEMup ERP, your break-even and per-product margins are built from live data: BOMs, purchase prices, labour and machine overhead roll up into a true cost per unit, so contribution margin and break-even are always current, not last quarter's estimate. Start free or explore the full feature set to see costing handled end to end.
Frequently asked questions
How do I calculate the break-even point?
Divide fixed costs by the contribution margin per unit, where contribution margin = selling price − variable cost. With ₹2,00,000 fixed costs, a ₹500 price and ₹300 variable cost, the contribution margin is ₹200, so break-even = 2,00,000 ÷ 200 = 1,000 units (₹5,00,000 revenue). The calculator above does it instantly.
What is contribution margin?
Contribution margin is the selling price of one unit minus its variable cost — ₹500 − ₹300 = ₹200 per unit. It is what each unit contributes toward fixed costs, and then profit. As a percentage of price (200 ÷ 500 = 40%) it is the CM ratio. A higher contribution margin means fewer units are needed to break even.
How do I lower my break-even point?
Break-even = fixed costs ÷ contribution margin, so cut fixed costs, raise the price, or reduce the variable cost per unit. Lifting the contribution margin even slightly pulls break-even down sharply, because the same fixed costs are recovered by fewer units.
How do I find the units needed for a target profit?
Add the target profit to fixed costs, then divide by contribution margin per unit: units = (fixed costs + target) ÷ (price − variable cost). For ₹1,00,000 profit on ₹2,00,000 fixed costs with a ₹200 margin, you need 1,500 units. Enter a target profit and the calculator shows it.
Need more shop-floor tools? Try the free All Calculators, the Profit Margin Calculator or the Production Cost Calculator.
Know your break-even on every product
OEMup builds break-even and margin from live BOMs, purchase prices and overhead — built for Indian manufacturing SMEs.
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