What the break-even point tells you
Your break-even point is the number of sales a month where income exactly covers costs. Below it, the shop loses money even if individual sales look profitable. Above it, every extra sale adds profit. Knowing the number turns a vague goal like "sell more" into a specific target.
Fixed costs vs variable costs
- Fixed costs stay the same whatever you sell: your Shopify plan or Etsy Plus, apps, email software, design tools, domain and any studio rent.
- Variable costs come with every sale: the product or materials, shipping label, packaging, platform and payment fees, and ad spend per sale.
Ads can be either. A fixed monthly budget is a fixed cost; a cost per sale that rises with volume is variable. Pick one approach and stick to it.
The formula
Contribution per sale = price − variable cost per sale
Break-even sales = fixed costs ÷ contribution per sale
A worked example
A Shopify store has these monthly fixed costs:
| Fixed cost | Per month |
|---|---|
| Shopify Basic plan | $39 |
| Apps | $36 |
| Email marketing | $25 |
| Ad budget | $400 |
| Total | $500 |
Each item sells for $35. Product, shipping, packaging and fees come to $20.95, leaving $14.05 per sale. $500 ÷ $14.05 = 35.6, so the store needs 36 sales a month to break even. To make $1,000 profit on top, it needs ($500 + $1,000) ÷ $14.05 = 107 sales.
Three ways to lower the number
- Raise contribution per sale. A $3 price rise takes contribution from $14.05 to $17.05 and cuts break-even from 36 to 30 sales.
- Cut fixed costs. Removing $100 of unused apps and tools brings break-even down to 29 sales at the original price.
- Increase order value. Bundles and add-ons raise contribution without adding fixed costs.
Break-even for a new shop
New shops often have higher fixed costs than sales in the first months, especially with ads running. That's normal, but set a limit: decide how many months you'll run below break-even and how much you're willing to spend getting there. If sales aren't moving towards the break-even number by then, change the product, price or marketing rather than adding more fixed costs.
Check it every month
Fixed costs creep up as you add apps and tools, and fee or shipping rises cut contribution. Recalculate your break-even point each month, and compare it with your actual sales to see how much room you have.
Enter your fixed costs and per-sale numbers to get your break-even point.
Open the break-even calculatorFrequently asked questions
How do you calculate a break-even point?
Divide monthly fixed costs by the contribution per sale, which is price minus variable cost per sale.
Are ads a fixed or variable cost?
Either. A set monthly budget is fixed; a cost per sale that rises with volume is variable. Be consistent.
How can I lower my break-even point?
Raise your price, cut variable costs, remove unused subscriptions, or increase order value with bundles.