Profitability & Margins
Break-Even Point
The sales volume or revenue at which total costs equal total revenue — no profit, no loss.
Formula
Break-Even Units = Fixed Costs / Contribution Margin per UnitWhat is the Break-Even Point?
The break-even point is the moment when your total revenue exactly equals your total costs. Below this point, you're operating at a loss. Above it, you're profitable.
Why It Matters for E-Commerce
Knowing your break-even point helps you set realistic sales targets, evaluate pricing decisions, and understand how much volume you need to cover your fixed costs (rent, software, salaries) on top of your per-order variable costs.
Example
Fixed costs: $5,000/month. Contribution margin: $20/unit. Break-even = 250 units/month.
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