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How to Calculate Your Break-even Point (Units & Revenue)
Your break-even point is the moment your sales cover every cost — one unit more and you're profitable, one less and you're paying to operate. Every price change, ad budget and sales target should be checked against it.
The formula takes two minutes to learn. Here it is, with a worked example and the mistakes that make sellers think they break even earlier than they really do.
Break-even Point Calculator
Your numbers
How many units you must sell to cover your costs.
$
Rent, salaries, software
$
$
Product, shipping, fees
$
Break-even point
$6,867.71 rev229 units
Contribution / unit
$17.49
Price − variable costContribution margin
58.3%
Break-even revenue
$6,867.71
Units to hit target
344 units
+ $2,000.00 profitThe break-even formula
Break-even (units) = Fixed costs ÷ (Price per unit − Variable cost per unit). The bottom half is your contribution margin per unit — what each sale contributes toward fixed costs.
Example: $3,000/month of fixed costs (software, warehouse, salaries), a $40 product, and $25 of variable cost per order (product, shipping, fees). Contribution = $15, so break-even = 3,000 ÷ 15 = 200 units a month — $8,000 of revenue.
Break-even in revenue, not units
Multiply break-even units by price, or divide fixed costs by contribution margin ratio: 3,000 ÷ (15 ÷ 40) = $8,000. The revenue form is handier for stores with many products — use your blended average contribution margin.
If you sell across marketplaces, remember each channel's fees change the variable cost, so the same product can have a different break-even on Amazon than on Shopify.
The mistakes that hide your real break-even
Treating ad spend as a fixed cost is the big one — for most e-commerce stores it scales with sales, so fold your average cost per order into variable costs instead.
Also easy to miss: returns and refunds (reduce effective price), payment fees, and your own time if you'd otherwise pay for the labour. Understating variable cost flatters the contribution margin and moves the target closer than it is.
Frequently asked questions
What is the break-even point formula?
Break-even (units) = Fixed costs ÷ (Price per unit − Variable cost per unit). The denominator is your contribution margin per unit. For revenue, divide fixed costs by the contribution margin ratio instead.
Is ad spend a fixed or variable cost?
For most e-commerce stores it behaves as a variable cost — it scales with orders. Fold average ad cost per order into your variable costs; treating it as fixed makes break-even look closer than it is.
How do I lower my break-even point?
Raise contribution margin (increase price or cut product, shipping and fee costs per order) or reduce fixed costs. Small per-unit savings move the target a lot: in the example above, $3 more contribution per unit cuts break-even from 200 to 167 units.
Track this on a live dashboard
Connect your store and watch these numbers update themselves — no spreadsheets.
Keep reading
The Complete Guide to E-commerce Profitability
Revenue is vanity; profit is sanity. Walk the profit ladder — gross, contribution and net — learn which costs belong where, how discounts, shipping and returns bite, and how to find the numbers that tell you if you're actually making money.
How to Calculate Break-even CPA
Break-even CPA is the most you can pay to win an order before it stops making money. Learn the formula, a worked example, and how to hold your Meta and Google CPA against it.
Gross Margin vs Contribution Margin vs Net Margin
Three margins, three jobs. Learn what gross, contribution and net margin each measure, the formula for each, and which one to use for pricing, product decisions and judging the whole business.