Vinu: Manu, I want to know the minimum sales my business needs just to survive. How do I figure that out?

Manu: That’s exactly what break-even analysis tells you—the point where total revenue equals total cost, with zero profit and zero loss.

Vinu: How do I calculate it?

Manu: First, identify two things—fixed costs and contribution per unit.

For example,

Fixed costs = ₹3,00,000 per month

Selling price per unit = ₹1,000

Variable cost per unit = ₹700

Contribution = ₹300 per unit

Manu: Break-even units = Fixed Cost ÷ Contribution per unit

= ₹3,00,000 ÷ ₹300 = 1,000 units

Manu: Exactly. Sales beyond that generate profit.

Vinu: Can we see this in sales value instead of units?

Manu: Yes.

Break-even sales = 1,000 units × ₹1,000 = ₹10 lakh.

Vinu: What if my sales drop below this level?

Manu: Then you’re operating at a loss.

If you sell only 800 units, you’re short by 200 units—meaning your fixed costs aren’t fully covered.

Vinu: How does this help in decision-making?

Manu: It gives clarity on pricing, cost control, and sales targets.

If your current capacity is only 900 units, your business model itself needs correction.

Manu: Break-even goes up.

If fixed costs rise to ₹3,60,000, you now need 1,200 units to break even.

Vinu: And if I reduce variable cost?

Manu: Contribution improves, and break-even comes down—making profit easier.

Vinu: Final takeaway?

Manu: Break-even is your survival line.

If you don’t know this number, you’re running your business without a financial safety benchmark.

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