Find your business break-even point — the exact number of units and revenue needed to cover all fixed and variable costs.
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Calculate Break-Even
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Contribution margins vary widely. A high CM% means lower fixed cost burden to break even.
| Industry | Typical CM% | Avg. Fixed Costs | Typical BEP |
|---|---|---|---|
| SaaS / Software | 70–85% | ₹5–50L/month | Low unit count needed |
| Restaurant / Café | 55–70% | ₹3–8L/month | 300–600 covers/month |
| Retail (fashion) | 40–60% | ₹2–6L/month | Depends on ticket size |
| Manufacturing | 20–40% | ₹10–50L/month | High volume required |
| Freelancer / Consultant | 80–95% | ₹50K–2L/month | Very few clients |
| E-commerce | 20–35% | ₹2–8L/month | High order volume |
Inputs
Avg. revenue per cover: ₹400
Food/beverage cost: ₹160 (40%)
Contribution margin: ₹240 / cover
Fixed costs/month: ₹4,80,000
(rent ₹2L + staff ₹2L + utilities ₹80K)
Break-Even
BEP = ₹4,80,000 ÷ ₹240
= 2,000 covers/month
= ~67 covers per day
(assuming 30-day month)
Safety Margin
If you average 90 covers/day:
Monthly covers: 2,700
Margin of safety: 26%
Sales can drop 26% before losses begin. Healthy benchmark is 20%+.
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The break-even point (BEP) is the number of units sold (or revenue generated) at which total revenue equals total costs — neither profit nor loss. Beyond this point, every unit sold generates profit.
Break-Even Units = Fixed Costs ÷ (Selling Price per Unit - Variable Cost per Unit). The denominator is called the Contribution Margin per unit. For example: ₹5L fixed costs, ₹500 selling price, ₹200 variable cost ? BEP = 5,00,000 ÷ 300 = 1,667 units.
Lower is better. If BEP is 50% of capacity or less, the business has good safety margin. BEP above 80% capacity is risky — a small revenue drop leads to losses. Aim for BEP below 40% of production/sales capacity.
(1) Reduce fixed costs (smaller office, reduce overheads), (2) Reduce variable costs (better supplier deals, efficiency), (3) Increase selling price (if market allows), (4) Increase sales volume (marketing, new channels), (5) Improve product mix to higher-margin items.
Contribution Margin = Revenue minus Variable Costs (used for break-even analysis, focuses on costs that change with production). Gross Margin = Revenue minus COGS (includes both variable manufacturing costs and fixed manufacturing overhead). Contribution margin is used for short-term pricing decisions; gross margin for overall business profitability analysis.
For multi-product break-even: calculate a weighted average contribution margin based on your sales mix. Example: Product A (60% of sales, Rs 200 contribution) plus Product B (40% of sales, Rs 100 contribution) = Weighted CM = Rs 160. Break-even units = Fixed Costs divided by Rs 160. This assumes a constant sales mix across products.
Margin of Safety = (Actual Sales minus Break-Even Sales) divided by Actual Sales expressed as percentage. Example: actual revenue Rs 10L, break-even Rs 7L: Margin of Safety = 30%. This means sales can fall 30% before losses begin. A 20%+ margin of safety is generally considered healthy; below 15% is dangerously close to break-even.
Semi-variable costs such as electricity (fixed base plus variable per unit) must be split into fixed and variable components before the break-even calculation. Use the high-low method: (Highest cost minus Lowest cost) divided by (Highest output minus Lowest output) = Variable rate per unit. Add the fixed portion to your fixed costs and variable portion to variable cost per unit.
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Learn how to calculate your break-even point, understand fixed vs variable costs, and use break-even analysis to make better pricing and production decisions.
Understand the three types of profit margins, what good margins look like by industry, and how to improve your margins using actionable strategies.
Calculate gross, operating and net profit margins — or find the selling price needed for your desired margin.
Calculate working capital, current ratio and quick ratio to assess your business's short-term financial health.
Add or remove GST from any amount. Get CGST and SGST breakdown for 5%, 18% or 40% GST rates (GST 2.0).