The break-even point is the number of units you need to sell, or the revenue you need to generate, before your total revenue equals your total costs. Beyond this point, every additional sale generates profit.
The break-even point is the number of units you need to sell, or the revenue you need to generate, before your total revenue equals your total costs. Beyond this point, every additional sale generates profit.
Break-Even Point = Fixed Costs ÷ (Selling Price − Variable Cost per Unit) Break-even analysis answers a fundamental question: how much do I need to sell to stop losing money? It combines your fixed costs (rent, subscriptions, salaries) with your variable costs per unit (COGS, shipping) to find the tipping point. Knowing your break-even point helps you set realistic sales targets and evaluate whether a new product or marketing campaign is worth pursuing. It is especially useful when launching a new store or entering a new market.
Break-Even Point = Fixed Costs ÷ (Selling Price − Variable Cost per Unit) Your monthly fixed costs are £3,000 (Shopify, apps, warehouse). You sell candles at £25 each with a variable cost of £10 per unit. Your break-even point is £3,000 ÷ (£25 − £10) = 200 units. You need to sell 200 candles per month before you start making profit.
Knowing your break-even point prevents you from investing in products or channels that cannot realistically generate enough volume to be profitable. It turns vague goals like 'sell more' into a concrete target number.
Only including obvious fixed costs and missing subscriptions, insurance, and platform fees
Assuming variable costs stay constant at all volumes — bulk discounts and shipping tiers change them
Calculating break-even once and never revisiting it as costs evolve
StoreLyst tracks your fixed and variable costs so you can see how close you are to break-even at any point in the month. It updates dynamically as orders come in and costs change.
Learn more about P&L Reporting →Calculate a weighted average contribution margin across all products based on their sales mix. Divide your total fixed costs by this weighted average to get a revenue-based break-even point rather than a unit-based one.
It depends on whether you treat marketing as fixed or variable. If you spend a set budget monthly, include it in fixed costs. If you spend per acquisition (like pay-per-click), include it in variable costs per unit.
Most ecommerce stores aim to break even within 3–6 months of launch. If you are not breaking even within 12 months, re-examine your pricing, costs, and customer acquisition strategy seriously.
A very high break-even point usually means your fixed costs are too high or your contribution margin per unit is too low. Consider raising prices, reducing COGS through better suppliers, or cutting unnecessary fixed expenses.
Stop calculating in spreadsheets. Get real-time break-even point tracking for your Shopify store.