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Break-even Calculator

Understanding your break-even threshold prevents catastrophic cash flow shortages. This calculator computes how many units and total sales revenue your store must generate before making its first dollar of net profit.

Break-even Calculator

Model the exact sales volume and revenue required to cover fixed and variable overhead.

Total Fixed Costs*

Monthly rent, software, subscriptions, retainers

Selling Price per Unit*

Retail price customer pays per item

Variable Cost per Unit*

COGS, packaging, shipping, per-order fees

Break-Even Milestones

Break-Even UnitsTarget Volume

80 units

Exact: 80.00 units

Break-Even Sales RevenueRevenue Target

$4,000.00

Minimum gross revenue to cover all expenses

Unit Contribution Margin

$25.00

Selling Price - Variable Cost

Contribution Margin Ratio

50.00%

(Contribution Margin / Price) × 100

Break-Even Analysis Formulas

1. Unit Contribution Margin

Contribution Margin = Selling Price - Variable Cost per Unit

The dollar amount generated by each individual unit that contributes toward paying fixed expenses.

2. Contribution Margin Ratio (%)

Contribution Margin Ratio = (Contribution Margin / Selling Price) × 100

The percentage of each sales dollar available to cover fixed overhead.

3. Break-Even Units

Break-Even Units = Fixed Costs / Unit Contribution Margin

Total units required to cover all fixed expenses (rounded up to nearest integer for physical goods).

4. Break-Even Revenue

Break-Even Revenue = Break-Even Units × Selling Price

Total gross sales revenue required before achieving positive net profits.

Worked Example: DTC Skincare Brand

A store spends $1,500.00/month on fixed expenses (Shopify Plus apps, Klaviyo, warehouse space). It sells a serum for $50.00, with variable costs (COGS, box, postage) totaling $20.00 per unit.

Input Values

Monthly Fixed Overhead:: $1500.00
Unit Retail Price:: $50.00
Variable Unit Cost:: $20.00

Calculated Output

Unit Contribution Margin:: $30.00
Break-Even Unit Target:: 50 units
Break-Even Gross Revenue:: $2500.00
Contribution Margin Ratio:: 60.00%

Breakdown: Each serum sale contributes $50.00 - $20.00 = $30.00 toward overhead. Dividing fixed costs of $1,500.00 by $30.00 yields exactly 50 units. At $50.00 per bottle, the brand must generate $2500.00 in monthly sales to break even.

Frequently Asked Questions

What is contribution margin per unit?

Contribution Margin per Unit = Selling Price per Unit - Variable Cost per Unit. It represents the incremental dollar amount each sale provides to cover your fixed costs and generate net profit.

What happens if Selling Price is less than or equal to Variable Cost?

If your selling price is less than or equal to variable cost, the contribution margin is zero or negative. In this scenario, every additional unit sold loses money, and the business can never break even regardless of sales volume.

What are examples of fixed vs. variable costs in e-commerce?

Fixed costs include monthly Shopify/software subscriptions, warehouse lease, and baseline staff payroll. Variable costs include product manufacturing cost (COGS), shipping postage, payment gateway transaction fees, and packaging materials.

Why are break-even units rounded up to the nearest whole number?

You cannot sell a fraction of a physical product. Even if the mathematical break-even is 124.2 units, selling 124 units leaves you slightly short of covering fixed expenses; thus, 125 units are required to reach profitability.