Break-even calculator for e-shops

How the break-even point is calculated

The break-even point is where your revenue exactly equals your costs. You are neither losing money nor making a profit. Every order above it earns you money. The calculation rests on one simple formula:

Break-even (orders) = fixed monthly costs ÷ contribution margin per order

The contribution margin per order is what is left from an order after you pay for the goods and the variable costs: average order value − cost of goods − packaging, shipping and fees. Divide your fixed costs by this margin and you get the number of orders that just covers your costs. Multiply it by the average order value to get the revenue you need.

FAQ

What is the break-even point?

The break-even point is where your revenue exactly equals your costs. You are neither losing money nor making a profit. Every order above it earns the business money. For an e-shop we express it as a number of orders or as monthly revenue.

How do you calculate the break-even point for an e-shop?

Break-even in orders = fixed monthly costs ÷ contribution margin per order. Contribution margin per order = average order value − cost of goods − other variable costs. Break-even revenue = number of orders × average order value.

What are fixed and variable costs?

Fixed costs are what you pay every month regardless of how many orders you get (rent, salaries, software, hosting, accounting). Variable costs grow with every order (buying the goods, packaging, shipping, payment gateway fees).

How can I lower my break-even point?

Three ways: cut fixed costs, increase your margin (higher prices or cheaper purchasing), or raise your average order value, for example with free shipping above a set amount or by upselling at checkout.