Break-Even
Calculator
BEP · Contribution Margin · Scenario Analysis

The key test: does the cost change if you produce/sell one more unit? Variable costs: raw materials, packing material, direct labour (piece-rate), freight outward, sales commission, payment gateway fees — all increase proportionally with sales. Fixed costs: rent, salaries (salaried staff), depreciation, interest on loans, insurance, software subscriptions, utility minimum charges — remain constant regardless of volume within a range. Some costs are semi-variable (phone bills, electricity beyond minimum — have a fixed portion + variable portion). Split semi-variable costs before entering into the calculator. TAXAJ's Virtual CFO classifies your cost structure and builds a proper variable/fixed split for management reporting.

P/V Ratio benchmarks by industry: Software / SaaS: 70–90% (very low variable cost). Consulting / Professional Services: 50–70%. FMCG / Consumer Goods: 30–50%. Manufacturing: 25–45%. Retail / Trading: 15–35%. Food & Restaurants: 20–40%. Construction: 15–30%. A high P/V ratio means: (1) Each rupee of sales contributes more to profit, (2) BEP is reached faster, (3) Profit accelerates strongly above BEP. Low P/V industries need very high volumes to be profitable — any pricing pressure or cost increase quickly wipes margins.

A high BEP means you need very high sales just to cover costs. Action plan: (1) Audit fixed costs ruthlessly — can rent be reduced by moving to a smaller space or co-working? Can any positions be outsourced? (2) Increase selling price — even a 5% price increase can reduce BEP by 10–15% for a 40% P/V business. Test price sensitivity carefully. (3) Reduce variable cost — renegotiate with suppliers, reduce material waste, change packaging. (4) Kill low-margin products — focus on products with highest P/V ratio. (5) Increase volume faster — fixed cost per unit falls as volume rises. TAXAJ performs a full cost structure review and identifies the biggest BEP reduction opportunities.

Break-even analysis is a standard component of business plans, CMA data for bank loans, and pitch decks for investors. Banks use BEP to assess: (1) Whether projected sales are realistic relative to BEP, (2) The "cushion" above BEP (margin of safety), (3) Time to reach profitability. Investors ask: "When do you break even?" and "What's your unit economics?" — meaning P/V ratio and contribution margin. For startups, the concept of "burn rate" and "runway" is essentially a version of BEP — how long until monthly revenue covers monthly costs. TAXAJ prepares complete break-even analysis for bank CMA submissions, investor pitches, and business plans.

It depends on whether you are computing BEP on a pre-GST or post-GST basis. Best practice: Use ex-GST (excluding GST) figures throughout. Set SP = selling price excluding GST (the amount you retain after remitting GST). VC = variable costs excluding input GST credit (since you claim ITC, the net cost = cost excluding GST). Fixed costs: use amounts net of GST where ITC is claimed. This way, your BEP and margins are on a comparable, tax-neutral basis. If you sell to unregistered buyers (B2C) with no ITC recovery, include GST in your SP and adjust VC accordingly. TAXAJ prepares unit economics and BEP analysis correctly accounting for GST implications.