BREAK-EVEN SALES & UNIT VOLUME CALCULATOR

The Break-Even Formula

Worked Example — $30 POD product, $500/mo fixed costs:

1. 1. Fixed Costs: $500/month (Shopify plan + software + ad retainer)
2. 2. Selling Price: $30
3. 3. Variable Cost/Unit: $12 (base cost + shipping + fees)
4. 4. Contribution Margin: $30 − $12 = $18
5. 5. Break-Even Units: $500 ÷ $18 = 27.78 units/month
6. 6. Break-Even Revenue: 27.78 × $30 = $833.33/month (the exact break-even point)
7. 7. In practice: since you can't sell a fraction of a unit, you'd round up to 28 units, which brings in $840 — $6.67 above break-even.

Frequently Asked Questions

Second Example: A Digital Download Store

1. 1. Fixed costs: $300/month (Shopify plan, design software, email tool).
2. 2. Selling price: $25.
3. 3. Variable cost per sale: $4 (payment processing and app fees).
4. 4. Contribution margin: $25 − $4 = $21.
5. 5. Break-even units: $300 ÷ $21 = 14.3, so 15 sales a month.
6. 6. Break-even revenue: $300 ÷ ($21 ÷ $25) = $300 ÷ 0.84 = $357.14.

Digital products break even much faster because nearly every dollar of the price is contribution margin.

Break-Even Revenue Using the Contribution Margin Ratio

If you think in revenue rather than units, use the formula above, where the ratio is (price − variable cost) ÷ price. In the $30 example the ratio is $18 ÷ $30 = 0.60, so $500 ÷ 0.60 = $833.33. It's the same answer, and useful when you sell many products at different prices.

Where Ad Spend Fits

A fixed monthly ad budget goes into fixed costs. If you pay per sale, treat it as a variable cost. Using the $30 product, if each sale costs $6 in ads, your variable cost becomes $12 + $6 = $18, the contribution margin drops to $12, and break-even rises from 28 to 42 units ($500 ÷ $12 = 41.7).

Your break-even ROAS is price ÷ contribution margin before ads: $30 ÷ $18 = 1.67. A campaign that returns less than $1.67 for every $1 spent loses money on each sale.

Can't Reach Break-Even? The Three Levers

• • Raise the price: at $33 the contribution margin becomes $21, and break-even drops to 24 units ($500 ÷ $21 = 23.8).
• • Cut variable cost: a cheaper supplier, lighter packaging or lower shipping.
• • Cut fixed cost: cancel apps and subscriptions you don't use. Every $50 saved removes about 3 units from the target in this example.

When to Recalculate Your Break-Even Point

• • When a supplier or marketplace changes its fees, for example a base cost increase or a new payment processing rate.
• • When you add or cancel a subscription, app or monthly ad budget.
• • Before a sale or discount, since a lower price cuts your contribution margin.
• • When your product mix changes. If cheaper items start selling more, your average contribution margin drops.

Once a month is a good habit. It only takes a minute, and it catches cost creep before it turns into a losing month.