Break-even calculator for shops
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Break-even sales = monthly fixed costs ÷ your gross margin. With ₹40,000 of rent, salaries and other fixed costs and an 18% margin, a shop needs ₹2,22,222 of sales a month, about ₹8,547 a day over 26 days, before it makes any profit. Enter your own costs and margin below to get your number, profit, safety margin and setup payback.
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1. Monthly fixed costs (har mahine ka kharcha)
Total fixed costs: ₹40,000 a month. Leave out the cost of goods you sell; that is in the margin below.
2. How much do you earn on each sale?
- Break-even sales a month
- ₹2,22,222
- Break-even sales a day
- ₹8,547
3. Where are you today? (optional)
- Profit at last month's sales
- ₹14,000
- Safety margin
- 25.9%
- Sales for your target profit
- ₹3,88,889
- Setup cost back in
- 18 months
Safety margin = how far sales can fall before you reach break-even. All figures stay in your browser.
Know another shop owner who needs this? It is free.
How to use it
- Enter monthly fixed costs. Rent, staff salaries, electricity, phone and software, loan interest or EMI and other costs you pay every month whether you sell or not.
- Enter your margin. Your average gross margin on sales in %, or the average selling price and purchase cost of an item. Use prices without GST.
- Read the break-even. The sales you need each month and each open day to cover all fixed costs. With price and cost, you also get items to sell.
- Compare with today. Add last month's sales to see your profit or loss and safety margin, a target profit to see the sales it needs, and a setup cost to see how many months until it comes back.
Break-even formulas
| You want | Formula | Example |
|---|---|---|
| Break-even sales a month | Fixed costs ÷ margin | ₹40,000 ÷ 18% = ₹2,22,222 |
| Break-even sales a day | Monthly figure ÷ open days | ₹2,22,222 ÷ 26 = ₹8,547 |
| Break-even items | Fixed costs ÷ (price − cost) | ₹40,000 ÷ ₹20 = 2,000 |
| Profit | Sales × margin − fixed costs | ₹3,00,000 × 18% − ₹40,000 = ₹14,000 |
| Sales for a target profit | (Fixed costs + target) ÷ margin | (₹40,000 + ₹30,000) ÷ 18% = ₹3,88,889 |
| Safety margin | (Sales − break-even) ÷ sales | 25.9% |
Margin and markup are not the same: a 25% markup is a 20% margin. Work out your real margin with the profit margin calculator, see the whole month with the profit and loss calculator, and read markup vs margin for retail shops.
Questions
What is the break-even point for a shop?
It is the sales at which the shop makes neither profit nor loss: the margin on what you sell exactly pays for rent, salaries and other fixed costs. Below it you lose money each month; above it, every extra rupee of margin is profit.
How do I calculate break-even sales?
Break-even sales = monthly fixed costs ÷ gross margin. With ₹40,000 of fixed costs and an 18% margin: 40,000 ÷ 0.18 = ₹2,22,222 of sales a month, or about ₹8,547 a day over 26 days.
What is the break-even formula in units?
Break-even units = fixed costs ÷ (selling price − cost per unit). If an item sells for ₹100 and costs ₹80, each sale adds ₹20; ₹40,000 of fixed costs needs 2,000 items a month.
Should I include GST in break-even?
No, if you are GST registered: use sales and costs without GST, because the GST you collect is paid to the government. A composition dealer pays tax on turnover from its own pocket, so it can add that tax rate to the fixed-cost side or reduce the margin by it.
What counts as a fixed cost?
Anything you pay each month regardless of sales: rent, salaries, electricity minimum, internet and software, loan interest or EMI, security and cleaning. The cost of goods you sell is not a fixed cost; it is already taken out through the margin.
How long will it take to recover my shop setup cost?
Divide the one-time setup cost (interiors, racks, deposit, first stock you cannot return) by the monthly profit above break-even. ₹2,50,000 with ₹20,000 of profit a month comes back in about 13 months.
What is margin of safety?
How far your sales can drop before you hit break-even, as a share of current sales. Sales of ₹3,00,000 with a break-even of ₹2,22,222 give a safety margin of about 26%; under 10% means a slow month can push you into loss.
Related
RichBills ye apne aap karta hai: 30 din free
RichBills records the purchase cost of every item, so its profit and loss report shows your real margin from actual sales, not a guess. Check each month whether you are above break-even.
30 din free, phir ₹99/month pehle 3 mahine, phir ₹199/month ya ₹1,999/saal. See pricing
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