Break-even and contribution calculator

The logic

Every unit sold contributes the difference between its price and its variable cost towards fixed costs. Once those contributions add up to the fixed costs, the business breaks even.

Contribution per unit = price − variable cost per unit
Contribution margin   = contribution per unit ÷ price
Break-even units      = fixed costs ÷ contribution per unit
Break-even revenue    = break-even units × price
Units for a target    = (fixed costs + target profit) ÷ contribution per unit

The calculator rounds break-even units up to a whole unit, because you cannot sell part of one.

A quick example

A café has monthly fixed costs (rent, salaries) of ₹3,00,000. A cup of coffee sells for ₹150 and costs ₹60 in milk, beans and cup. Each cup contributes ₹90, so the café needs to sell 3,00,000 ÷ 90 = 3,333.3, or 3,334 cups a month to break even — about 111 cups a day over a 30-day month.

Using this in a case interview

Break-even questions often hide inside larger cases: "Should we open this store?" or "Is the new machine worth it?" Look for a fixed investment and a per-unit margin, and the break-even calculation usually tells you whether the volume required is realistic.

Limits of the model

Break-even analysis assumes price and variable cost stay constant with volume, and that every unit made is sold. Real businesses face discounts, volume-based costs and wastage — so treat the answer as a starting point.