Enter your costs and price below.
Costs you pay whatever you sell: rent, software, salaries.
What one unit sells for, excluding tax.
Costs that only happen when you sell: product, shipping, fees.
Contribution margin per unit is your selling price minus your variable cost. It is what each sale puts toward the fixed costs. To see the same figure as a percentage of price, use the profit margin calculator.
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The break-even point is the sales volume at which total revenue exactly covers total costs, so you make neither a profit nor a loss. Below it you are losing money, above it every extra sale adds profit. It is usually expressed in units, but it can also be stated in revenue.
Break-even units equals fixed costs divided by contribution margin per unit, where contribution margin is the selling price minus the variable cost per unit. With $5,000 of fixed costs, a $40 selling price and $15 of variable cost, the contribution margin is $25, so you need $5,000 divided by $25, which is 200 units. Those 200 units at $40 each is $8,000 of break-even revenue.
Contribution margin is what one sale leaves behind after paying its own variable costs, so it is the amount that contributes toward your fixed costs. Sell a $40 product that costs $15 to make and deliver and each unit contributes $25. Once enough units have contributed to cover the fixed costs in full, everything after that is profit.
Fixed costs stay the same whether you sell one unit or a thousand: warehouse rent, Shopify and app subscriptions, salaries, insurance and accounting. Variable costs only occur when a sale happens: the cost of goods, shipping, packaging, pick and pack fees and payment processing. The test is simple, if the cost disappears when you sell nothing, it is variable.
Because you cannot sell part of a product. If the raw arithmetic returns 200.4 units you have not covered your fixed costs until the 201st sale completes, so the calculator rounds up. Rounding down would report a break-even point you have not actually reached.
There is no break-even point at any volume. Your contribution margin is zero or negative, which means each sale leaves nothing toward the fixed costs, or actively deepens the loss. Volume cannot rescue this: the only fixes are raising the price, cutting the unit cost, or dropping the product. The calculator tells you this instead of returning a meaningless number.
Divide your fixed costs by the contribution margin ratio, which is contribution margin divided by selling price. On a $40 price with a $25 contribution the ratio is 62.5%, so $5,000 divided by 0.625 gives $8,000 of break-even revenue. Revenue is the more useful view when you sell many products at different prices, because a single unit count means little across a mixed catalogue.
There is no universal target, because the number only matters relative to what you can realistically sell. The practical test is time: how long, at your current sales rate, until you pass it. If 200 units is three weeks of normal trading you are in good shape, and if it is eleven months you have a pricing or cost structure problem rather than a sales problem.
It lowers it, and faster than most people expect, because the entire price increase drops into the contribution margin. Raising the price from $40 to $45 on a $15 variable cost lifts contribution from $25 to $30, cutting break-even from 200 units to 167. The catch is that price rises can reduce volume, so model the two together rather than assuming demand holds.
It moves the point down in direct proportion. Cut fixed costs from $5,000 to $4,000 while the $25 contribution stays put and break-even falls from 200 units to 160. Fixed costs are usually the easiest lever to pull quickly, since cancelling unused software or renegotiating a lease does not require you to touch your pricing or your product.
Include shipping and payment processing as variable costs, because they scale with each order and are frequently the reason a product that looks profitable is not. Leave sales tax and VAT out of the selling price entirely, since that money is collected for the government rather than kept. If you offer free shipping, the cost is still yours and belongs in the variable cost per unit.
Treating variable costs as fixed, forgetting transaction fees and returns, and using an average selling price that ignores discounting. Discounts are the quiet one: if a fifth of your units go out at 20% off, your real average price is lower than your list price and your true break-even point is higher than the calculator suggests. Run the numbers on your post-discount average, not your list price.
Every unit sold past the break-even point adds its full contribution margin to profit, because the fixed costs have already been paid for. At 200 break-even units with a $25 contribution, selling 260 units produces $1,500 of profit from those extra 60 sales. This is why repeat customers matter so much: they arrive without new acquisition spend, so their orders sit on the profitable side of the line.
Yes. No signup, no email and no limit on how many scenarios you run through it. It is built by Mage Loyalty, a loyalty, referrals and store credit app for Shopify.
Mage is a loyalty, referral and store credit app built for Shopify. Reward repeat purchases, run VIP tiers, and give customers a reason to come back, without writing a line of code.
