How many units must you sell to break even with ₹2 lakh monthly fixed costs?
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Calculate your monthly break-even point when fixed costs are ₹2 lakh, selling price is ₹500/unit, and variable cost is ₹200/unit.
Why Break-Even Numbers Decide Business Viability
A small business with ₹2 lakh monthly fixed costs, a ₹500 selling price, and ₹200 variable cost per unit needs to sell 667 units per month just to break even. Fixed Costs ÷ Contribution Margin per Unit (₹2,00,000 ÷ ₹300). Sell 800 units and you make ₹39,900 profit; sell 500 and you lose ₹50,000. Break-even is the single most important number in unit economics.
Three levers shift break-even down. Cut fixed costs (downsize office, automate, switch to variable-cost services): if rent drops ₹50,000, break-even falls to 500 units. Raise prices (premium positioning, add bundles, value pricing): at ₹600 selling price keeping the rest constant, break-even falls to 500 units. Cut variable costs (better supplier rates, in-house production): every ₹50 saved per unit reduces break-even by 100 units.
Two real-world adjustments: (a) include the owner’s salary in fixed costs — a business that “breaks even” without paying you anything is technically a loss-making hobby; (b) for service businesses, the unit isn’t units but billable hours — same formula applies, just with hourly rate instead of unit price.
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Frequently Asked Questions
What’s the difference between break-even and profitability?+
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The concept behind the number
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