Free calculator · Any small business
Enter your monthly fixed costs, your average selling price per unit and the variable cost of each unit. See how many units you must sell to cover your costs, and how many to reach a profit target.
Contribution per unit = selling price − variable cost.
Break-even units = fixed costs ÷ contribution per unit (rounded up).
Break-even sales = fixed costs ÷ contribution margin.
Units for a target profit = (fixed costs + target profit) ÷ contribution per unit.
Fixed costs are ₹60,000 a month. You sell at ₹500 and each unit costs ₹300, so each sale contributes ₹200 (a 40% contribution margin). You break even at ₹60,000 ÷ ₹200 = 300 units, or ₹1,50,000 of sales. To make ₹20,000 profit you need 400 units.
Costs you pay whether or not you sell anything this month: rent, salaries, loan instalments, insurance and subscriptions. Some costs are partly fixed; put the fixed part here.
Use your average selling price and average variable cost per unit, or work in sales value by using your average gross margin as the contribution margin.
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You do not need fifty reports to run a small business well. These ten numbers, each with a formula and a worked example from one shop's month, tell you whether you are making money, where it is stuck and what to do next.
Break-even is the level of sales at which your business stops losing money. Here is how to sort your costs, calculate it in units and rupees, and use it before you change a price or sign a lease.
Profit is worked out in three layers: what the goods earn, what the business earns after running costs, and what is left after interest and tax. Here is how to calculate each one for a month.
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