The break-even point is the sales volume at which revenue covers all costs and profit is zero. The formula: break-even point in units = fixed costs ÷ (price − variable cost per unit). A store with €6,500 of fixed costs a month and €12 of contribution margin per order needs 542 orders to break even. Every order after that brings profit.
People rarely get the formula wrong. They get wrong what goes into it: marketplace and payment fees, shipping the store pays for, returns. Leave them out and the break-even point comes out far lower than the real one. Below is the calculation in units and in euros on one illustrative store, how taxes change it, the most you can pay for ads per order, and what moves the point the most.
When people calculate a break-even point
Usually before launching a store or a new sales channel, when you need to know how many orders a month it takes to pay rent, salaries and software. Or when there are sales but no money, and the owner wants to know how much to sell just to stop losing. People search for "break even point formula", "how to calculate break even point" and "break even point in sales dollars", and then ask how to draw a break-even chart and how to do it in Excel.
The formula is the same for a coffee shop and an online store. What differs is what counts as a variable cost: a store has more of them than textbook examples do — marketplace fees, card payment fees, shipping, ads per order, returns.
Break-even point formula
Divide fixed costs for the period by the contribution margin of one unit, and you get the number of sales after which the business stops losing money. To get the revenue figure instead, divide the same fixed costs by the contribution margin ratio.
- Fixed costs do not depend on how much you sell: rent, salaries, the accountant, software subscriptions.
- Variable costs come with every sale: the cost of goods, marketplace and payment fees, shipping you pay for, packaging, ads paid per order.
- Contribution margin is price minus variable costs. It is the money each order brings to cover fixed costs. How it differs from gross margin is explained in what is gross margin.
At the break-even point profit is zero: all of the contribution margin goes to fixed costs. If you are VAT-registered, use prices and revenue without VAT: the VAT you collect from shoppers is not your money.
Break-even point calculator
Enter monthly fixed costs, the price per unit and the variable cost per unit — the calculator finds the break-even point with the formula FC ÷ (P − VC) in units and in revenue. Add a sales plan to see the profit and the margin of safety. The calculation runs in your browser, and the data is not sent anywhere.
Break-even example for an online store
Illustrative example for the arithmetic, not market figures or the fees of any specific service. The same store as in the article on return on sales: 1,000 orders a month with an average order of €50 without VAT. The goods cost €30 per order, marketplace and payment fees take 6% of the price, the store pays €1 of shipping and €4 of ads per order. Fixed costs are €6,500 a month.
| Line | Amount, € | Share of price |
|---|---|---|
| Average order | 50 | 100% |
| Goods (cost) | −30 | 60% |
| Fees 6% | −3 | 6% |
| Shipping paid by the store | −1 | 2% |
| Ads per order | −4 | 8% |
| Contribution margin | 12 | 24% |
Round up: 541 orders still lose money. Check: 542 × 12 = €6,504 of contribution margin against €6,500 of fixed costs. At the actual 1,000 orders the store earns 1,000 × 12 − 6,500 = €5,500 of operating profit — the same figure as in the return on sales calculation.
On a break-even chart, the point is where the revenue line crosses the total cost line. The cost line starts not at zero but at €6,500 of fixed costs: you pay them even with no orders. Left of the crossing is loss, right of it is profit.
The gap between actual sales and the break-even point is the margin of safety: (50,000 − 27,083) ÷ 50,000 = 45.8%. That is how much revenue the store can lose before it goes into the red.
Which store costs are fixed and which are variable
Test each line with one question: will the amount change if tomorrow there are no orders at all? If not, it is fixed; if it disappears, it is variable. One line in the wrong column moves the point by hundreds of orders.
| Cost | Where it goes | The catch |
|---|---|---|
| Cost of goods | variable | use the full cost, with inbound shipping from the supplier and currency differences |
| Marketplace fee, card payment fee | variable | a percentage of the price — a discount lowers them together with the price |
| Shipping you pay for, packaging | variable | free shipping over a threshold is still your cost |
| Returns | variable | two shipments and no revenue; put an average amount per order into the calculation |
| Tax charged on revenue | variable | if your tax regime takes a percentage of revenue, it grows with every sale |
| Ads | depends on how you pay | pay per order — variable; a fixed monthly budget — fixed |
| Rent, salaries, accountant, software | fixed | they grow in steps: a second warehouse or another employee raises the point |
Ads raise the most questions. If you pay a marketplace for each sale, it is a variable cost, as in the example. If the €4,000 monthly budget is fixed and spent whatever the sales, it moves to fixed costs: FC = €10,500, contribution margin €16, break-even point 10,500 ÷ 16 = 656.25 → 657 orders instead of 542.
Does tax change the break-even point?
Income tax does not: it is charged on profit, and at the break-even point there is no profit. A tax charged on revenue does, because it works as one more variable cost. And any tax matters once you plan a profit rather than just zero.
To find the sales you need for a profit after tax, gross the target up by the tax rate first. Illustrative example: a 20% tax on profit; real rates depend on the country and the size of the profit — in the UK, for example, corporation tax is 19% on profits under £50,000 and 25% over £250,000.
If instead your tax regime charges, say, an illustrative 3% of revenue, each €50 order loses another €1.50 of contribution margin: 6,500 ÷ 10.50 = 619.05 → 620 orders to break even instead of 542. Plan to "break even" with the version that matches your tax: otherwise you will work at a loss between those two numbers without noticing.
How much you can spend on ads per order
No more than the contribution margin before ads minus the share of fixed costs per order. In the example, an order before ads brings 50 − 30 − 3 − 1 = €16. That is the absolute ceiling: an order bought for more loses money before rent and salaries.
So with a plan of 1,000 orders, the store breaks even if an order from ads costs no more than €9.50. With a plan of 600 orders, the limit is 16 − 10.83 = €5.17. The fewer orders, the cheaper each one has to be: fixed costs are spread over fewer sales. How to turn this into a cost-per-click limit is shown in Google Ads for ecommerce.
What moves the break-even point the most
Price and discounts move it more than fixed costs do. A discount cuts the contribution margin of every order, and to cover the same €6,500 you have to sell far more. Here is the same example with one thing changed at a time — a simple cost-volume-profit (CVP) analysis.
| Change | Contribution margin per order, € | Break-even, orders |
|---|---|---|
| As is | 12 | 542 |
| Prices +5% | 14.35 | 453 |
| Cost of goods −5% | 13.50 | 482 |
| Fixed costs +€1,000 | 12 | 625 |
| Ads €6 per order instead of €4 | 10 | 650 |
| 10% discount to shoppers | 7.30 | 891 |
A 10% discount lowers the price by €5, but the contribution margin by €4.70 out of €12 — by 39%. The break-even point almost doubles. A 5% price increase works the other way: almost all of it, except the 6% fee, goes into the contribution margin.
Hence the order of steps when the break-even point is above your actual sales:
- Check prices you have not reviewed for a while, especially after a supplier raised theirs. How to set a price that covers every fee — in how to calculate markup.
- Compare purchase prices from several suppliers: every euro saved on cost lowers the point.
- Work out the ad cost per order for each channel and switch off those above the limit from the previous section.
- Only then cut fixed costs or push for volume.
How to calculate it with hundreds of products
Calculate in euros, not units: divide fixed costs by the store's average contribution margin ratio. The average ratio is total contribution margin for the month divided by total revenue, not the average of individual products' percentages.
For a store with thousands of items, a "break-even point in units" makes no sense: a phone case and a laptop do not add up. Take last month's data: revenue, cost of goods sold and variable costs. If the sales mix shifts — say, more cheap low-margin items — the point rises even though no price changed. So recalculate it every month.
In Excel or Google Sheets three cells are enough: B1 — fixed costs, B2 — average order value, B3 — variable costs per order.
Where the calculation misleads
The formula assumes price, variable costs and fixed costs do not change with volume. In a store that holds only within a range:
- Fixed costs grow in steps. At 2,000 orders you will need another employee or a bigger warehouse, and the point jumps.
- Ads get more expensive with volume. The first orders come cheap, each next one costs more, so the contribution margin is lower at high volumes.
- Returns eat revenue. Count only orders that were kept, and put the cost of returned parcels into variable costs.
- The point ignores cash tied up in stock. A store can be above break-even and still have no cash if profit goes into inventory or into payouts the marketplace holds back.
When to check the break-even point every month
When supplier prices and exchange rates change every week: a break-even point calculated in spring is wrong by autumn because the contribution margin has changed. It is more useful to put two numbers side by side once a month — the calculated threshold and actual revenue.
In Elbuz, sales analytics shows revenue, profit and margin for completed orders — by month, filtered by category and order source. That is the gross level: the report does not subtract fees, ads or taxes, so build the contribution margin on top of it with the table from this article.
Who does not need it: with a few dozen orders a month, the three-cell spreadsheet from the previous section is enough. How orders and customers are kept in one place is described on the ecommerce CRM page.
Orders and sales analytics in ElbuzRevenue, profit and margin from completed orders, 14 days free
Frequently asked questions
What is the break-even point in simple words?
It is the number of sales after which a business stops losing money: revenue covers all costs and profit is zero. Every sale above it brings profit.
Is there a formula for break-even?
Yes. In units, divide fixed costs by price minus variable cost per unit: FC ÷ (P − VC). In sales dollars or euros, divide fixed costs by the contribution margin ratio.
What is the profit at the break-even point?
Zero. At that point the whole contribution margin goes to cover fixed costs.
How do I calculate the break-even point in sales dollars?
Divide fixed costs by the contribution margin ratio, the share of contribution margin in revenue. Example: 6,500 ÷ 0.24 = €27,083 of revenue a month.
What is a break-even point diagram?
A chart with sales volume on the horizontal axis and money on the vertical one. The cost line starts at the level of fixed costs and rises with variable costs, the revenue line starts at zero; where they cross is the break-even point.
How do I calculate the break-even point in Excel?
Put fixed costs in B1, price in B2 and variable cost per unit in B3; the formula =ROUNDUP(B1/(B2-B3),0) gives the break-even point in units. In money — =B1/((B2-B3)/B2).
What is cost-volume-profit analysis?
CVP analysis shows how profit changes with price, sales volume and costs. The break-even point is its main result, and the "one change — a new point" table in this article is a simple CVP analysis.
Sources
- Break-even point in units and in sales dollars — U.S. Small Business Administration, sba.gov/counseling/plan-your-business.
- Break-even point and contribution margin ratio — OpenStax, Managerial Accounting, 3.3 — biz.libretexts.org.
- UK corporation tax rates — gov.uk/government/publications/rates-and-allowances-corporation-tax.
Checked on October 31, 2026. All other numbers in the article are illustrative examples for the arithmetic.
Юлия Портнова
The break-even point is an important financial indicator for a business. It shows how many units of a product need to be sold to cover all costs. For example, if your fixed costs are 1000 rubles, and your variable costs per unit are 50 rubles, and the selling price is 100 rubles, then the break-even point will be 20 units.