Break-even calculator for a product or app
The break-even point is where revenue covers every cost: fixed costs ÷ (price − variable cost per unit) gives the number of units or subscriptions you need to sell. Enter your monthly fixed costs, price and cost per unit to see the break-even volume and revenue.
Break-even point
417 units a month
Exactly 416.67 units, or ₹6,25,000 of revenue a month
- Contribution margin per unit
- ₹1,200Price − variable cost: ₹1,500 − ₹300. What each sale adds towards fixed costs.
- Contribution margin ratio
- 80%₹1,200 ÷ ₹1,500: the share of each sale's revenue left after variable costs.
- Break-even units (exact)
- 416.67₹5,00,000 ÷ ₹1,200. You can't sell part of a unit, so the result rounds up to 417.
- Break-even revenue
- ₹6,25,000Fixed costs ÷ contribution margin ratio: ₹5,00,000 ÷ 80%.
- Profit at 417 units
- ₹400A little above zero, because the break-even point rounds up to a whole unit.
- Sales for ₹1,00,000 profit
- 500 units a month(₹5,00,000 + ₹1,00,000) ÷ ₹1,200 = 500, rounded up.
- Revenue for ₹1,00,000 profit
- ₹7,50,000(Fixed costs + target profit) ÷ contribution margin ratio.
- Profit at current sales (500 units)
- ₹1,00,000500 × ₹1,200 − ₹5,00,000.
- Margin of safety
- 16.67%Sales can fall by 83.33 units (16.67%) before you make a loss.
| Units a month | Revenue | Variable costs | Fixed costs | Profit or loss |
|---|---|---|---|---|
| 0 | ₹0 | ₹0 | ₹5,00,000 | −₹5,00,000 |
| 104 | ₹1,56,000 | ₹31,200 | ₹5,00,000 | −₹3,75,200 |
| 209 | ₹3,13,500 | ₹62,700 | ₹5,00,000 | −₹2,49,200 |
| 313 | ₹4,69,500 | ₹93,900 | ₹5,00,000 | −₹1,24,400 |
| 416 | ₹6,24,000 | ₹1,24,800 | ₹5,00,000 | −₹800 |
| 417 (break-even) | ₹6,25,500 | ₹1,25,100 | ₹5,00,000 | ₹400 |
| 500 (current sales, target profit) | ₹7,50,000 | ₹1,50,000 | ₹5,00,000 | ₹1,00,000 |
| 521 | ₹7,81,500 | ₹1,56,300 | ₹5,00,000 | ₹1,25,200 |
| 626 | ₹9,39,000 | ₹1,87,800 | ₹5,00,000 | ₹2,51,200 |
| 834 | ₹12,51,000 | ₹2,50,200 | ₹5,00,000 | ₹5,00,800 |
- Assumes one price and one variable cost per unit, and fixed costs that stay the same at every volume shown. For several products or plans, use the average price and average variable cost weighted by how many of each you sell.
- Target profit is before tax.
How is the break-even point calculated?
Each sale first pays its own variable costs; what is left, the contribution margin, goes towards fixed costs. Break-even is the number of sales whose contribution margins add up to the fixed costs. With ₹5,00,000 of fixed costs a month, a ₹1,500 subscription and ₹300 of variable cost per subscriber, each subscriber contributes ₹1,200, so you need ₹5,00,000 ÷ ₹1,200 = 416.67 subscribers.
You can't sell two-thirds of a subscription, so the calculator rounds the units up: 417 subscribers is the first whole number that covers fixed costs, with ₹400 left over. Break-even revenue doesn't need rounding: it is fixed costs ÷ the contribution margin ratio, ₹5,00,000 ÷ 80% = ₹6,25,000 a month.
A profit target works the same way: add it to fixed costs before dividing. If you enter current sales, the margin of safety shows how far they can fall before you make a loss, as a share of current sales. If the price is at or below the variable cost, each sale adds nothing or loses money, and there is no break-even point at any volume.
contribution margin = price − variable cost per unit contribution margin ratio = contribution margin ÷ price break-even units = fixed costs ÷ contribution margin (rounded up) break-even revenue = fixed costs ÷ contribution margin ratio units for a target profit = (fixed costs + target profit) ÷ contribution margin margin of safety = (current sales − break-even units) ÷ current sales
How to work out your break-even point
- 1Enter your fixed costsAdd up what you pay each month whatever you sell: salaries, rent, software and other overheads.
- 2Enter the price and variable costType the price of one unit or one month of a subscription, and what each extra sale costs you, such as payment fees, materials or hosting per customer.
- 3Add current sales and a targetOptionally, enter how many units you sell now to see the margin of safety, and a monthly profit target to see the sales it needs.
- 4Read the result and the tableThe result shows the break-even units, rounded up, with the exact value and the break-even revenue. The table shows the profit or loss at volumes around it.
Frequently asked questions
What is contribution margin?
Should break-even units be rounded up or down?
What does the margin of safety tell you?
Which costs of a software product are fixed and which are variable?
How does a lower price change the break-even point?
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