Free Break-Even Calculator for Ecommerce

Your break-even point is the number of sales you need to cover all your costs—both fixed costs like rent and variable costs per order. At this point, you're not making profit or loss. It's the critical threshold every business needs to understand to set realistic goals and make smart pricing decisions.

Break-even units = Fixed Costs ÷ (Selling Price - Variable Cost per Unit). The amount left after variable costs is called contribution margin—it's what each sale contributes toward covering fixed costs. Once you hit break-even, every additional sale becomes profit.

Discounts come straight out of your contribution margin. If you make $40 per sale and offer a $10 discount, you now only make $30 per sale. This means you need to sell more units just to cover the same fixed costs. For example, if you needed 500 sales to break even, a 10% discount might push that to 600+ sales.

Fixed costs stay the same regardless of sales—like rent, salaries, and software subscriptions. Variable costs change with each sale—like product cost, shipping, and payment fees. Break-even happens when your contribution margin (selling price minus variable costs) times units sold equals your fixed costs.

Discounts reduce your revenue immediately—a 10% discount costs you 10% on every sale. Store credit for next purchase only costs you when customers come back and use it. Since only 28% typically redeem, a 10% credit offer costs about 2.8% in practice. The rest is margin you keep while still offering an incentive.

Three ways: (1) Reduce fixed costs through operational efficiency, (2) Lower variable costs by negotiating with suppliers or optimizing shipping, (3) Protect your contribution margin by using incentives like store credit instead of upfront discounts. Even small margin improvements can significantly reduce the sales needed to break even.