Break-Even Point
How many units (or how much revenue) you need to sell before you've covered all your costs. Before break-even, every sale is just paying off expenses. After break-even, you're actually making money.
Example
Your fixed costs run $3,000/month (Shopify, apps, warehouse). Each unit contributes $25 toward those costs after variable expenses. You need to sell 120 units — or $5,400 in revenue — just to break even.
Why It Matters
If you don't know your break-even point, you can't tell whether a slow month is a bump in the road or a cash emergency. It also tells you the minimum ad budget you need — if you're spending $2K/month on ads but only generating $1,500 in contribution margin, you're going backwards.
Pro Tip
Write your break-even number on a sticky note and put it next to your monitor. Every Monday, check where you are against it. If you're behind pace by mid-month, you know it's time to push a promotion or increase ad spend.
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