How to Calculate Your Break-Even Point as an Online Seller

Worked example: an Etsy candle shop

A candle maker has these numbers each month:

• Fixed costs: $600 (Etsy Plus, a scheduling app, insurance, supplies that do not scale, and a small salary).
• Average price: $30.
• Variable cost per candle: $12 (materials, jar, label, packaging and postage).
• Etsy fees: about 11% of the price.

Each candle contributes $30 − $3.30 − $12 = $14.70. The shop needs $600 ÷ $14.70 = 40.8, so 41 sales a month to break even, or about $1,230 of sales.

To earn $900 of profit on top, it needs ($600 + $900) ÷ $14.70 = 103 sales a month.

Small changes, big effects

Because fixed costs do not move, small improvements to the contribution per unit reduce the number of sales you need:

• Raise the price from $30 to $33 and the contribution rises to $17.37. Break-even falls from 41 to 35 sales.
• Cut variable costs by $1 (cheaper jars bought in bulk) and the contribution rises to $15.70, so break-even falls to 39.
• Cancel a $60 app and fixed costs fall to $540, so break-even falls to 37.

This is why the first step when a shop is not making money is rarely "sell more". Check the price and the costs first.

Break-even for a new product

The same idea works for a single product launch. Add up the one-off costs of the launch, such as samples, moulds, photography and the first batch of packaging, and divide by the contribution per unit of that product. If a new mug design costs $240 to develop and each mug contributes $9 after fees and materials, you need 27 sales before the design has paid for itself. Comparing that number with how many similar products usually sell in their first few months tells you quickly whether the launch is a safe bet or a gamble.

When you can never break even

If the price does not cover the variable costs plus fees, the contribution is zero or negative. Every extra sale then loses money, and no amount of marketing will fix it. This happens most often with cheap items that carry a fixed per-order fee, with free shipping that costs more than expected, or with deep discounts. Read how to run a sale without losing money before cutting prices.

Using your break-even point

• Pricing: check that your planned volume is comfortably above break-even. If you need 41 sales and usually make 45, one slow month puts you in the red.
• New costs: before adding a $50-a-month app, divide $50 by your contribution per unit. That is how many extra sales it must bring in.
• Platform choice: fees change the contribution per unit. Compare platforms with the Etsy, eBay and Amazon calculators.
• Per-item minimums: each fee calculator on this site also shows a break-even item price, the lowest price that covers that item's costs. Use it as your floor when accepting offers.

The bottom line

Your break-even point is fixed costs divided by what each sale contributes after fees and variable costs. Work it out, keep it in view, and use small changes to price and costs to bring it down. The break-even calculator does the maths in seconds.