Break-Even CalculatorKnow Your Minimum Sales Target — Mudra, PMEGP & CGTMSE

Break-even analysis tells you the minimum sales level needed to avoid a loss. It matters because: • It sets a clear revenue target for new businesses • It helps you price your products correctly • Banks and investors use it to assess loan risk • It reveals whether your business model is fundamentally viable For example: if your fixed costs are Rs 30,000/month and you earn Rs 80 contribution per unit, you must sell at least 375 units/month before making any profit. Knowing this number helps you plan marketing, production, and hiring.

Contribution Margin (CM) is the amount each unit contributes to covering fixed costs AFTER subtracting variable costs. CM = Selling Price − Variable Cost per Unit CM % = (CM / Selling Price) × 100 Profit Margin is only meaningful AFTER fixed costs are covered. Example: • Selling Price: Rs 200 • Variable Cost: Rs 120 • CM: Rs 80 per unit (40% CM ratio) • If fixed costs = Rs 30,000, you need 375 units to break even • The 376th unit onwards = pure profit of Rs 80/unit Contribution margin is the more useful metric for break-even calculations.

Yes — it is a mandatory component in the financial feasibility section of: • PMEGP (Prime Minister's Employment Generation Programme) DPR format • MUDRA Tarun loan applications above Rs 5 lakh • CGTMSE-backed term loan project reports • State government subsidy schemes like CM Rozgar Yojana All major public and private sector banks specifically look for: • Break-even units and revenue • Expected achievement timeline (within Year 1 or Year 2) • Margin of safety at projected sales • Sensitivity analysis showing BEP at 80% capacity utilization MudraReady generates all of these automatically in bank-ready PDF format.

Margin of Safety (MoS) shows how much your sales can fall before you start losing money. MoS % = (Actual Sales − Break-Even Sales) / Actual Sales × 100 Interpretation: • MoS > 25%: Excellent — business is robust even in a downturn • MoS 15–25%: Good — acceptable for most loan approvals • MoS 10–15%: Borderline — banks may ask for more collateral • MoS < 10%: Risky — banks may reject or reduce loan amount For CGTMSE guarantee, banks typically prefer a projected MoS of 15%+ by Year 2 of operations.

A high BEP usually means one of three things: fixed costs are too high, contribution margin is too low, or both. Here is a systematic approach: 1. REDUCE FIXED COSTS: Can you start from home instead of renting? Can you hire part-time instead of full-time? Can you lease equipment instead of buying? 2. RAISE YOUR PRICE: Research competitor pricing. Even a 10–15% price increase with better quality/service can dramatically reduce BEP. Example: raise price from Rs 200 to Rs 220 → CM rises from Rs 80 to Rs 100 → BEP drops from 375 to 300 units. 3. REDUCE VARIABLE COSTS: Bulk buying, better supplier negotiations, reducing waste. A Rs 10 reduction in variable cost has the same effect as a Rs 10 price increase. 4. PHASE YOUR GROWTH: Start with lower fixed costs and scale up once you cross BEP. Banks appreciate a phased projection. 5. CHANGE PRODUCT MIX: Focus on your highest-margin offerings first.