Can the business make money?

Estimate how much each sale contributes after its direct costs, then compare that amount with the costs of keeping the business open. This rough calculation helps you test a price and sales target before committing cash; it is not a profit forecast or guarantee of demand.

Calculate the contribution per sale

Subtract materials, packaging, delivery and other costs that rise with each sale from the selling price. For a ₹200 sale with ₹120 in direct costs, the contribution is ₹80. That amount must still cover fixed costs, your pay, tax and any financing costs.

Estimate a break-even target

If fixed costs are ₹4,000 a month, ₹4,000 divided by ₹80 is 50 sales. This covers those fixed costs only: it does not cover the owner's pay unless that pay is included in the ₹4,000. If the contribution is zero or negative, more sales at that price will not cover fixed costs. Review the price and costs before relying on this calculation.

Test the assumptions and cash timing

Get supplier and delivery quotes, include spoilage or returns where relevant, and compare the sales target with what prospective customers actually say and buy. Recalculate with slower sales or higher costs. A profitable sale on paper can still leave a cash shortage if customers pay after suppliers or rent are due; make a cash forecast.

As you prepare to launch, explore business registration and seek qualified advice on tax and costs for your circumstances.

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