How much do you have to sell to stand still?
Break-even worked out from contribution rather than gross margin, so the costs that move with every sale are counted. Plus the volume a target profit needs, and how much a price rise can afford to lose.
Your monthly numbers
Everything that doesn't change with volume: salaries, rent, software, professional fees.
Per order, subscription, consultation or project, excluding GST.
Everything that happens only because you made the sale: materials, delivery, commissions, payment fees, unrecoverable GST on them.
Orders, subscriptions or jobs in a typical month.
Optional. Shows the volume needed to earn it.
Break-even
3,579 units
That’s ₹17,89,474 of revenue a month, about 119 units a day.
Below break-even. At this price and cost, 379 more units a month, or the same volume with lower fixed costs, closes the gap.
- Contribution per unit
- ₹190
- Contribution margin
- 38.0%
- Contribution at current volume
- ₹6,08,000
- Profit or loss this month
- minus ₹72,000
- Units for your target profit
- 4,632 units
- A 5% price rise can lose
- 11.6% of volume
- A 10% price rise can lose
- 20.8% of volume
Break-even is a monthly profit line, not a cash line: a business can be above it and still short of cash if customers pay late. Nothing you type is sent anywhere or stored.
The number most founders calculate slightly wrong
Break-even is the revenue at which a business covers its costs and earns nothing. It's simple arithmetic, and it's usually calculated with the wrong margin.
The common version divides fixed costs by gross margin. Gross margin in most startup P&Ls covers a narrow idea of cost of sales: hosting for software, food cost for a kitchen, consumables for a clinic. It leaves out the costs that exist only because a sale happened: payment gateway fees, sales commissions, delivery partners, aggregator commissions and the GST on those fees where it can't be reclaimed.
Put those back and you have contribution, which is what each sale really leaves behind for fixed costs. For a food business selling mostly through aggregators, or a consumer business paying gateway fees on small tickets, the gap between the two is the difference between a break-even you can hit and one you can't.
What the calculator gives you
- Contribution per unit and contribution margin, from your price and variable cost.
- Break-even in units and in revenue, monthly, and roughly per day.
- Profit or loss at your current volume.
- Margin of safety: how far sales can fall before the month turns into a loss.
- The volume needed to earn a profit you name.
- How much volume a 5% or 10% price rise can afford to lose before contribution falls.
Everything runs in the browser. Nothing you type is sent anywhere or stored.
Sorting your costs, which is the only hard part
- Fixed costs
- Salaries of people whose time doesn't change with volume, rent, utilities, software, professional fees, insurance. They arrive whether you sell one unit or a thousand.
- Variable costs
- Materials, food cost, consumables, delivery, packaging, payment fees, sales commissions, aggregator cuts, usage-based infrastructure, and GST on any of those that you can't claim back.
- The awkward middle
- Delivery staff on fixed salaries, part-time support, contractors used when busy. Treat them as fixed if they're paid regardless of volume, and as variable if their hours actually track sales.
- What doesn't belong
- Loan repayments, tax and capital spending are cash items rather than costs for this calculation. Depreciation is a cost but not cash, so a profit break-even and a cash break-even are different numbers.
A worked example
An illustrative cloud kitchen. Fixed costs are ₹6.8 lakh a month: rent, kitchen staff, utilities and software. The average order is ₹500 before GST. Food cost, packaging, aggregator commission and the GST on that commission come to ₹310. It currently does about 3,200 orders a month. Every figure is invented.
| Figure | |
|---|---|
| Contribution per order | ₹190 |
| Contribution margin | 38% |
| Break-even orders | 3,579 a month, about 119 a day |
| Break-even revenue | ₹17.9 lakh a month |
| Result at 3,200 orders | A loss of about ₹72,000 |
| Orders for ₹2 lakh of monthly profit | 4,632 a month |
The instructive part is what it takes to close a ₹72,000 gap. Roughly 380 more orders a month, about 13 a day, which is a marketing question. Or ₹23 more contribution per order, which is a pricing or packaging question. Or ₹72,000 less fixed cost, which is a harder conversation about staffing or rent.
Most operators reach for the first option because growth feels better than cuts. At a 38% contribution margin, a 10% price rise can lose almost 21% of volume before contribution falls, which makes the second option worth testing before the first.
Break-even looks different by business
- Services firms
- The unit is a billable hour or a project. Variable cost is the delivery team's time, so utilisation decides everything. Break-even is better expressed as billable hours needed per person per month.
- Software
- Variable cost per customer is small, so break-even is mostly about how many customers cover the fixed cost base. The trap is treating support and onboarding as fixed when they grow with every new customer.
- Food service and retail
- Thin contribution margins mean break-even is sensitive to price, waste and channel mix. Work it out per outlet, because a company average tells you nothing about which site is carrying the others.
- Healthcare services
- The unit is a consultation, test or procedure, and clinician cost may be fixed salary or a revenue share. Where it's a share, contribution per episode is stable and break-even moves with utilisation of rooms and equipment.
What moves break-even fastest
Four levers change the answer, and they are not equally powerful. Taking the kitchen above as the starting point, each of these is a 5% change, and the effect on break-even orders is very different.
| Change | New break-even | Effect |
|---|---|---|
| Nothing changes | 3,579 orders | The starting point |
| Price up 5%, to ₹525 | 3,163 orders | 416 fewer orders needed |
| Variable cost down 5%, to ₹294.50 | 3,309 orders | 270 fewer |
| Fixed costs down 5%, to ₹6.46 lakh | 3,400 orders | 179 fewer |
| Volume up 5%, to 3,360 orders | 3,579 orders | No change to break-even, and the loss shrinks to ₹42,000 |
Price is the strongest lever because every rupee of a price rise is a rupee of contribution, while a rupee saved on variable cost only helps on the units you sell and a rupee off fixed cost helps once. That's the arithmetic behind the old observation that most small businesses are underpriced rather than overstaffed.
Volume doesn't move break-even at all. It moves you relative to it. Worth remembering when a growth plan is presented as the answer to a margin problem.
Break-even across a year, not a month
A single month's break-even can mislead in any business with seasons, which in India means most of them. Festive quarters, exam seasons, monsoon months, appraisal cycles and the March financial year end all move volume, and some fixed costs arrive once a year rather than monthly.
Two adjustments make it realistic. First, use an average month for fixed costs, including a twelfth of the annual items: audit fees, insurance, software renewals, the festive bonus. Second, work out break-even for the year as a whole, then see which months are expected to sit below it and whether the good months carry them.
A business that breaks even comfortably across a year but loses money for four consecutive months has a cash problem rather than a margin problem, and the fix is a forecast and a reserve, not a price rise.
Profit break-even is not cash break-even
A business can pass break-even on paper and still run short of money. Three reasons, all common in India.
- Customers pay later than you do. A services firm that breaks even every month can still need cash to fund 60 days of receivables while it grows.
- GST and TDS move on fixed dates regardless of whether customers have paid.
- Depreciation is a cost with no cash behind it, while equipment purchases and deposits are cash with no cost line. Both push the two break-even points apart.
So use break-even to judge whether the shape of the business works, and a weekly cash forecast to judge whether it survives the next quarter. They answer different questions and both are needed.
Using it in a plan, not just once
Break-even is most useful as a line in the monthly pack rather than a calculation done once when someone gets worried. Three habits make it work.
- 01Recalculate it each month from actuals, because fixed costs creep and variable costs move with supplier prices and channel mix.
- 02Put break-even revenue beside actual revenue in the MIS, with the margin of safety as a percentage. It's a single line and it tells a founder more than most charts.
- 03Before any commitment that adds fixed cost, a hire, a lease, a tool, calculate the new break-even first. A ₹60,000 monthly hire in the kitchen example adds about 316 orders a month to the bar.
That third habit is the one worth keeping. Fixed costs are easy to add one at a time and hard to remove, and every addition raises the volume the business needs forever, or until someone cuts it.
When break-even is the wrong question
For a venture-funded company deliberately investing ahead of revenue, break-even this month isn't the goal, and treating it as one leads to cutting the spending that creates growth.
The useful version there is different: what would break-even look like if we stopped investing in growth? Strip discretionary growth spending out of fixed costs and see whether the remaining business covers itself. A company that would be profitable without its growth spend has a genuine choice about its next round. One that wouldn't is dependent on raising, which is worth knowing before the conversation starts.
That version of the calculation is also the one investors run in their heads when they ask about your path to profitability. Being able to answer it with a number, and with the specific spending you would stop, is a much stronger position than describing profitability as something that arrives later with scale.