The short answer
Break-even units = fixed costs ÷ (selling price per unit − variable cost per unit). The price must exceed the variable cost for each sale to contribute towards fixed costs.
Understand fixed and variable costs
Before choosing a price, define one unit: one notebook, one delivered meal, one repair visit or one workshop seat. List the costs that change when you deliver another unit. Then list costs for the period that you incur even when you sell nothing. The U.S. Small Business Administration uses this fixed-cost and variable-cost distinction in its break-even method; the arithmetic applies here to a rupee-based teaching example, not to Indian tax rules.
| Type | Illustrative items | Question to ask |
|---|---|---|
| Variable | Materials, per-order packaging and delivery | What does one more sale require? |
| Fixed for the month | A fixed workspace charge or software plan | What do I pay even with no sales? |
| Mixed | A base service charge plus usage | Can I separate the fixed and variable parts? |
A worked example in rupees
Imagine a small notebook venture selling one product at ₹250. Materials, packing and other per-unit costs are ₹150. Each sale leaves ₹100 to cover the month’s fixed costs of ₹20,000. Dividing ₹20,000 by ₹100 gives 200 units. At 200 units, revenue is ₹50,000 and modelled total costs are ₹20,000 + (200 × ₹150) = ₹50,000.
| Units | Revenue | Total cost | Surplus / shortfall |
|---|---|---|---|
| 0 | ₹0 | ₹20,000 | −₹20,000 |
| 100 | ₹25,000 | ₹35,000 | −₹10,000 |
| 200 | ₹50,000 | ₹50,000 | ₹0 |
| 300 | ₹75,000 | ₹65,000 | ₹10,000 |
These are model results, not audited profit. Include every relevant cost before relying on your own estimate, and use consistent treatment of taxes, discounts and refunds. A profitable-looking month can still have a cash shortage if customers pay later.
Explore the break-even calculation
Without the calculator, subtract variable cost from price and divide fixed costs by the result. Round up when units cannot be divided. If the result in the denominator is zero or negative, sales do not cover positive fixed costs under this model.
A cost calculation is not the whole pricing decision
A price must make sense to the customer as well as to your cost sheet. Compare what the offer actually includes: quality, convenience, delivery, reliability and alternatives. If a competing notebook costs less, ask whether you are comparing the same size, material and service. Do not assume customers will pay more simply because your own production is expensive.
Try a downside case before committing to stock. What happens if only half the expected units sell, deliveries cost more or some orders are refunded? If the plan works only at full capacity with no mistakes, reduce the commitment or redesign the offer. A higher selling price also changes demand; the calculator cannot predict that reaction.
Make your own pricing worksheet
Next, check when the money arrives →Check your understanding
With ₹20,000 fixed costs and ₹100 contribution per unit, what is break-even?
200 units: ₹20,000 ÷ ₹100. At a selling price of ₹250, revenue is ₹50,000 and total modelled costs are also ₹50,000.
What if my selling price equals variable cost?
Each unit contributes zero towards fixed costs. With positive fixed costs, no sales volume breaks even under this model; revisit price, costs or the offer.
Sources & further reading
Updated 20 September 2026. Open the issuing authority’s page for current rules, fees and course availability. Examples and worksheets are PLS Foundation learning exercises; legal and financial decisions may need qualified advice for your circumstances.