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Create a free accountWhat is break-even?
Break-even is the point where your total revenue covers your total fixed and variable costs, resulting in neither profit nor loss. Every unit sold beyond that point contributes directly to profit.
What is contribution margin?
Contribution margin is your selling price minus your variable cost per unit — what's left from each sale to put toward fixed costs and, eventually, profit.
How break-even is calculated
Divide your fixed costs by your contribution margin per unit, then round up — you can't sell a fraction of a unit, so a raw result of 250.4 units means 251 units must actually be sold.
Fixed vs. variable costs
Fixed costs (rent, salaries, software) don't change with sales volume. Variable costs (materials, packaging, per-order shipping) rise and fall with every unit you sell.
Frequently asked questions
What is a break-even point?
The break-even point is where your total revenue exactly covers your total fixed and variable costs — you're neither making a profit nor a loss. Sell fewer units than this and you're losing money; sell more and you're in profit.
How do you calculate break-even units?
Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit, rounded up to the next whole unit since you can't sell a fraction of one. For example, ₹50,000 in fixed costs with a ₹300 contribution margin per unit needs 167 units to break even.
What is contribution margin?
Contribution margin is Selling Price per Unit − Variable Cost per Unit — the amount each unit sold contributes toward covering your fixed costs before you start making a profit.
What is the difference between fixed and variable costs?
Fixed costs stay the same regardless of how much you sell — rent, salaries, software subscriptions. Variable costs change with every unit sold — raw materials, packaging, per-unit shipping or commission.
How do I calculate break-even revenue?
Break-Even Revenue = Break-Even Units × Selling Price per Unit, using the rounded-up unit count — so it always matches the number of units you'd actually need to sell.
What is margin of safety?
Margin of safety is how far your expected sales volume is above (or below) your break-even point, in units, revenue and as a percentage. A larger margin of safety means more room for sales to fall before you start losing money.