Break-Even Formula for E-commerce
6 min read · Updated 2026-06
Definition
The break-even point is where total revenue exactly covers total costs. Everything before break-even pays for costs. Everything after is profit. It is the most important number most merchants never calculate.
Formula
Break-Even Units = Fixed Costs ÷ Contribution per Unit
Break-Even Revenue = Break-Even Units × Selling Price
Example
You are launching a new product line. Monthly fixed costs:
- Shopify plan: $39
- Apps (reviews, email): $65
- Ad budget: $2,000
- Packaging design: $50
- Total fixed costs: $2,154/month
Each unit:
- Selling price: $45
- Product cost: $14
- Shipping: $5.50
- Payment fee: $1.61
- Packaging: $1.80
- Contribution per unit: $22.09 undefined
Break-even = $2,154 ÷ $22.09 = 97.5 units → need 98 units ($4,410 revenue) before seeing a dollar of profit.
Common Mistakes
- Forgetting payment fees. $1.61 on a $45 product changes break-even from 89 to 98 units — 10% more sales needed.
- Not accounting for refunds. 7% refund rate means you need even more sales to break even.
- Using break-even as a goal. Break-even is where survival starts. Target 2–3x break-even.
Calculate Your Break-Even
Try the Break-Even Calculator →
FAQ
What is break-even in e-commerce?
The point where total revenue equals total costs. Below it you lose money. Above it you profit.
How do I calculate break-even for a new product?
Divide fixed costs by contribution per unit. If fixed costs are $5,000/month and each unit contributes $15, you need 334 units.
What if I cannot reach break-even?
Raise prices, cut variable costs, or reduce fixed costs. If none work, the product may not be viable.
Should I include marketing?
Yes. If fixed (monthly ad budget), include in fixed costs. If per-sale, include in variable costs.
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