Find how many projects a freelancer needs per month to cover fixed monthly costs.
Break-even point is the sales volume at which your total revenue exactly equals your total costs — below it you're operating at a loss, above it every additional sale contributes to profit. It's one of the most useful early numbers for a new product, service, or business, because it answers "how many do I actually need to sell before this is viable?"
The calculation is straightforward: fixed costs (rent, salaries, subscriptions — costs that don't change with sales volume) divided by the contribution margin per unit (selling price minus variable cost per unit — what each sale actually contributes toward covering fixed costs after direct costs are paid).
This gives break-even in units and in revenue. It assumes selling price and variable cost per unit stay constant regardless of volume, which is a simplification — real-world bulk discounts, seasonal pricing, or step-changes in fixed costs (like needing a second location) aren't modeled here.
Worked example: a small café has ₹50,000 in fixed monthly costs, sells meals for ₹150, and each meal costs ₹60 in ingredients and direct labor. Contribution margin = 150 − 60 = ₹90 per meal. Break-even = 50,000 ÷ 90 = 555.6, rounded up to 556 meals a month — you always round up, not to the nearest whole number, since selling 555.6 meals isn't possible and 555 would still leave you short of covering costs.
Fixed costs stay the same regardless of how much you sell — rent, salaries, software subscriptions. Variable costs scale with each unit sold — raw materials, packaging, per-unit shipping.
You’d lose money on every sale regardless of volume — there’s no break-even point until pricing or costs change, since the contribution margin is negative.
No, this is a pre-tax break-even calculation on revenue and direct costs only.