Break-Even Calculator
By Herzel MishelFounder, AgentisLast reviewed
The break-even point is the number of units you have to sell before your business starts making money. Below the break-even point you are losing money on every order in aggregate; above it, every additional sale drops through to profit. This calculator takes your fixed costs, your unit price, and your variable cost per unit, and returns both the number of units and the total revenue you need to cover all costs. It is designed for ecommerce operators evaluating a new SKU launch, a price change, or the viability of a marketing campaign. Understanding your break-even point is one of the most important things a founder can know, because it turns abstract profit goals into a concrete sales target that you can actually manage against.
Inputs
Rent, salaries, software, and any cost that does not scale with orders.
Average selling price per unit after discounts.
COGS plus variable fulfillment, packaging, and transaction fees.
Results
Break-Even Units
1,042
Break-Even Revenue
$83,333
Contribution Margin per Unit
$48.00
Contribution Margin %
60.00%
What the Result Means
If your break-even point is higher than your realistic monthly sales volume, the product is not viable at current pricing: you either need to raise price, reduce variable cost, cut fixed costs, or find a way to drive significantly more volume. A common mistake is to look at break-even once at launch and never revisit it. COGS shifts quarterly as raw material costs change, shipping rates move, and payment processor fees get renegotiated. Your break-even point today is probably 10 to 15 percent higher than it was when you last checked. The other trap is treating paid marketing as a fixed cost. Paid marketing scales with how much you spend; if you are reliant on ads to hit your sales target, then CAC should be factored into variable cost, not fixed cost, which will push your break-even point materially higher.
How It's Calculated
Break-even analysis uses the contribution margin, which is the amount that each unit sold contributes toward covering fixed costs. Contribution margin per unit is calculated as Unit Price minus Variable Cost per Unit. Variable costs are anything that scales with each additional order: product COGS, packaging, pick-and-pack, outbound shipping, and payment processing fees. Fixed costs, in contrast, do not change with order volume in the short term: rent, salaries, software subscriptions, and retained marketing overhead. Break-even units is calculated as Fixed Costs divided by Contribution Margin per Unit, which tells you how many units you must sell for contribution margin to fully cover fixed costs. Break-even revenue is simply Break-Even Units multiplied by Unit Price. Contribution margin percentage is the contribution margin expressed as a percentage of price. Note that break-even analysis assumes a single product or a constant product mix; if you sell multiple SKUs at different margins, you will need to run the calculation per SKU or use a weighted average.
The Gap This Calculator Reveals
Break-even analysis tells you the target. Agentis checks that every individual order actually contributes to hitting it. The mid-market margin problem is not that founders do not know their break-even point; they usually do, at a blended level. The problem is that the blended number hides order-level losses: a promo code plus a remote-zip freight cost plus an FX shift can push a single order below its contribution margin floor, and thousands of those orders ship before anyone catches the pattern. Agentis watches every Shopify Plus order as it comes in, calculates its true contribution margin against live COGS and freight within 60 seconds, and flags or holds anything below your defined floor before it ships. Your break-even target becomes something checked at the order level, not just measured at the period level.
Sources
Frequently Asked Questions
What is the break-even point in ecommerce?
The break-even point is the sales volume at which total revenue equals total costs, fixed plus variable. Below that volume, the business loses money in aggregate; above it, each additional sale contributes to profit. It is measured in both units and revenue. Break-even units is fixed costs divided by contribution margin per unit, where contribution margin is unit price minus variable cost per unit. Break-even revenue is break-even units multiplied by unit price. Fixed costs are rent, salaries, software subscriptions, and any cost that does not scale with orders; variable costs are product COGS, packaging, pick-and-pack, outbound shipping, and payment processing fees. The calculation assumes a single product or a constant product mix; multi-SKU brands should run it per SKU or use a weighted average. Compare the break-even units this calculator returns with your realistic monthly volume to see whether the product is viable at its current price.
Should I include marketing costs in break-even analysis?
Yes, but carefully. Fixed marketing overhead (brand team salary, creative software) goes in fixed costs. Performance marketing that scales with volume (Meta and Google spend to acquire each customer) should be treated as variable cost per unit and subtracted from contribution margin. The reason is structural: paid marketing scales with how much you spend, so if you rely on ads to hit your sales target, each additional unit carries an acquisition cost. Treating that spend as fixed makes contribution margin per unit look larger than it is, which pushes the break-even point artificially low. Ignoring CAC is the most common mistake in ecommerce break-even analysis. Moving CAC into variable cost will push your break-even point materially higher, but the higher number is the one you can actually hit. To apply it here, add per-unit acquisition cost to the variable cost input alongside COGS, fulfillment, and packaging, and compare the two results.
What is contribution margin versus gross margin?
Gross margin only deducts COGS. Contribution margin deducts COGS plus all variable costs: fulfillment, packaging, payment fees, and often variable marketing. In this calculator, contribution margin per unit is unit price minus variable cost per unit, and contribution margin percentage expresses that figure as a share of price. Contribution margin is the more useful number for unit economics because it is the true amount each sale contributes toward fixed costs and profit. Break-even analysis has to use contribution margin rather than gross margin because fixed costs are covered only by what is left after every variable cost is paid. A product can show a comfortable gross margin and still have a thin contribution margin once pick-and-pack, outbound shipping, and payment processing are subtracted. Use the contribution margin per unit and percentage outputs here to see how much of each sale is actually available to cover your fixed costs.
How often should I recalculate break-even?
Every quarter at minimum. COGS shifts as raw material and shipping rates move, variable costs change when you renegotiate 3PL contracts or payment processors, and fixed costs change when you hire, add software, or expand warehouse space. Because break-even units equals fixed costs divided by contribution margin per unit, a small movement in either input moves the target. Your break-even point today is probably 10 to 15 percent higher than it was when you last checked. Price changes matter too: unit price here means average selling price after discounts, so heavier promo activity raises break-even even at an unchanged list price. Brands that recalculate once a year are almost always operating against a stale break-even target. Re-run this calculator with current fixed costs, realized price, and variable cost each quarter and track how the break-even units figure trends.
What happens if contribution margin is negative?
If contribution margin per unit is negative, you lose money on every sale and more volume makes it worse, not better. Contribution margin per unit is unit price minus variable cost, so it turns negative when COGS, fulfillment, packaging, and payment fees together exceed the realized price. Break-even is mathematically impossible at that price. The break-even units formula divides fixed costs by that figure, which is why no sales volume can rescue the product. You must either raise price, cut variable costs, or discontinue the product. Negative contribution also occurs at the order level while the blended number stays positive, for example when a promo code and a remote-zip freight cost hit the same order. Agentis flags those orders within 60 seconds of being placed and can hold them before fulfillment, so negative-contribution orders do not ship unreviewed. If this calculator shows a negative figure, confirm the price input reflects post-discount realized price before concluding the product is unviable.
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Contribution Margin
The revenue remaining after deducting all variable costs associated with fulfilling an order, including COGS, shipping, payment processing fees, and pick-and-pack labor.
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The minimum margin an order must clear after discounts, COGS, freight, fees, and FX are counted. Orders that fall below the profit floor are flagged for review or automatically held before they ship.
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The gradual, often undetected loss of profit across many orders, driven by small per-order cost overruns that compound into significant revenue erosion over time. Also called revenue leakage, a term more common in marketplace-seller (Amazon/Walmart) contexts for the same underlying pattern.
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