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Break-Even Point Calculator

Work out how many orders a month your online store needs to cover its fixed costs, from your average order value and the real costs of each order.

What is the break-even point?

The break-even point is the sales volume at which a business makes no profit and no loss. For an online store it is the number of orders per month whose contribution, after product cost, shipping, fees, refunds and ad spend, exactly covers the fixed costs: apps, software, staff and rent.

Fixed costs, order value and the cost of each order

Enter your monthly fixed costs and what an average order looks like. Leave any cost line that does not apply empty. Nothing is pre-filled: the grey numbers are only examples.

Fixed costs

Costs you pay each month whatever you sell: store plan, apps and software, salaries, rent, insurance and accounting.

Average order

What the customer pays for the average order.

Costs of each order

Everything that grows with each order. Together they decide what one order contributes towards your fixed costs.

Optional: today and your target

Add your current orders to see your margin of safety, and a profit target to see the orders it takes.

The formula

How the break-even point is calculated

Contribution per order = Average order value - Variable costs per order; Break-even orders = Fixed costs / Contribution per order (rounded up); Break-even revenue = Break-even orders x Average order value

Break-even orders per day are the monthly figure divided by 30. For a profit target, add the target to the fixed costs before dividing.

Fixed costs
Monthly costs that do not change with orders: store plan, apps, software, salaries and rent.
Average order value
What the customer pays for the average order.
Variable costs per order
Product cost, shipping and fulfilment, payment fees, refunds, other per-order costs and ad spend per order.
Payment fees
Average order value x payment fee rate.
Refunds
Average order value x refund rate: the revenue expected to go back to customers on each order.
Contribution per order
Average order value minus all variable costs per order. It is what one order adds towards fixed costs.
Break-even revenue
Break-even orders x average order value. Before rounding up, it equals fixed costs / contribution margin ratio.
Margin of safety
(Current orders - break-even orders) / current orders.
Orders for a target profit
(Fixed costs + target profit) / contribution per order, rounded up.
  • Break-even orders are rounded up to a whole order, because part of an order does not cover the rest of your fixed costs.
  • Refunded revenue is treated as lost: the refund returns the order value while product and shipping costs are already spent. Return postage adds to the cost; stock you can resell reduces it.
  • Per-day figures use a flat 30-day month.
  • If contribution per order is zero or negative, no number of orders covers fixed costs and the calculator says so instead of showing a break-even point.

Worked examples

Three break-even calculations, worked through

Each example follows the same steps as the calculator above. The amounts work in any currency.

Example 1

A small store with no paid ads

A store has 3,000 of fixed costs a month. The average order is 75.00, the products in it cost 30.00, shipping and fulfilment 8.00, the payment provider takes 3% and 2% of orders are refunded.

Inputs

Fixed costs per month
3,000
Average order value
75.00
Product cost
30.00
Shipping and fulfilment
8.00
Payment fee
3%
Refund rate
2%

Working

  1. Payment fees: 75.00 x 3% = 2.25; expected refunds: 75.00 x 2% = 1.50
  2. Contribution per order: 75.00 - 30.00 - 8.00 - 2.25 - 1.50 = 33.25, which is 44.3% of the order
  3. Break-even orders: 3,000 / 33.25 = 90.2, rounded up to 91 orders a month
  4. Break-even revenue: 91 x 75.00 = 6,825, or 6,766.92 before rounding up
  5. Orders per day: 91 / 30 = 3.0

Break-even point

91 orders a month

About 3 orders a day cover the fixed costs. Every order after the 91st adds 33.25 to profit.

Example 2

Paid ads on every order

Another store has 12,000 of fixed costs a month. The average order is 80.00, with product cost of 28.00, shipping 9.00, other per-order costs of 1.50 and ad spend of 18.00 per order. The payment fee is 2.5% and 5% of orders are refunded.

Inputs

Fixed costs per month
12,000
Average order value
80.00
Product cost
28.00
Shipping and fulfilment
9.00
Payment fee
2.5%
Refund rate
5%
Other costs per order
1.50
Ad spend per order
18.00

Working

  1. Payment fees: 80.00 x 2.5% = 2.00; expected refunds: 80.00 x 5% = 4.00
  2. Contribution per order: 80.00 - 28.00 - 9.00 - 2.00 - 4.00 - 1.50 - 18.00 = 17.50, which is 21.9% of the order
  3. Break-even orders: 12,000 / 17.50 = 685.7, rounded up to 686 orders a month
  4. Break-even revenue: 686 x 80.00 = 54,880
  5. Orders per day: 686 / 30 = 22.9
  6. Without the ad spend: contribution is 35.50 and break-even is 12,000 / 35.50 = 338.0, rounded up to 339 orders

Break-even point

686 orders a month

Ad spend of 18.00 per order lifts the break-even point from 339 orders to 686. The fixed costs did not change; each order contributes far less.

Example 3

A known margin, margin of safety and a profit target

A store knows its contribution margin is 38% after ad spend. The average order is 64.00, fixed costs are 8,500 a month, it takes 400 orders a month today and the owner wants 4,000 of profit a month.

Inputs

Fixed costs per month
8,500
Average order value
64.00
Contribution margin
38%
Current orders per month
400
Target profit per month
4,000

Working

  1. Contribution per order: 64.00 x 38% = 24.32
  2. Break-even orders: 8,500 / 24.32 = 349.5, rounded up to 350 orders a month, or 22,400 of revenue
  3. Margin of safety: (400 - 350) / 400 = 12.5%
  4. Profit at 400 orders: 400 x 24.32 - 8,500 = 1,228
  5. Orders for the target: (8,500 + 4,000) / 24.32 = 514.0, rounded up to 514 orders, about 17.1 a day or 32,896 of revenue

Break-even point

350 orders a month

At 400 orders the store sits 12.5% above break-even and makes 1,228. Reaching 4,000 of profit takes 514 orders, 114 more than today.

The guide

Break-even analysis for online stores

Orders instead of units

Most break-even calculators count units of one product at one price. An online store sells baskets: different products at different prices, bundled into orders that each carry shipping, a payment fee and often an ad cost. Counting orders, with your average order value and the average cost of an order, answers the question you actually face: how many orders a month do I need? If you sell a single product at a single price, treat one unit as one order and the answer in orders is the answer in units.

Break-even point vs break-even ROAS

The break-even point tells you how many orders cover your fixed costs. Break-even ROAS answers a different question: how much revenue an ad has to return per unit of spend before the ad itself stops losing money. One is about volume across the whole business, the other is a threshold for a single campaign. If you are setting an ad budget, use the break-even ROAS calculator; if you are deciding whether the business covers its monthly costs, stay here.

Which costs are fixed and which are variable?

A cost is fixed if it stays the same whatever you sell this month, and variable if it grows with each order. The split decides which box a cost goes in.

Fixed: platform, apps and software

Your store plan and monthly app subscriptions are the same on a quiet day and a busy one. Add them to fixed costs.

Fixed: people, rent and overheads

Salaries, contractors on a retainer, office or warehouse rent, insurance and accounting belong here too. Warehouse storage billed by the month is fixed.

Variable: product, shipping and fees

Product cost, postage and packaging, and the percentage your payment provider takes all grow with every order. Enter them as costs per order.

Variable: refunds

Revenue handed back on refunded orders reduces what each order contributes. The calculator treats refunded revenue as lost while the product and shipping costs are already spent.

Ad spend: pick one box

If ad spend rises and falls with the orders you buy, enter it as ad spend per order. If you commit a flat monthly budget, put it in fixed costs and leave ad spend per order empty. Entering the same spend in both counts it twice.

How to lower your break-even point

Break-even orders are fixed costs divided by contribution per order, so there are only two levers: shrink the top or grow the bottom.

Raise what each order contributes with a higher order value, a lower product or shipping cost, fewer refunds or a lower ad cost per order. Or cut fixed costs you no longer need. The AOV lift calculator and the free shipping threshold calculator test two ways to raise the order value, and the COGS calculator works out the full landed cost of what you buy.

Using the result to make decisions

Compare break-even orders with your real monthly orders: the gap is your margin of safety. Use the target profit field to turn a profit goal into an order count and a daily sales rate. To judge a new product launch, add its upfront cost (stock deposit, design, setup) to fixed costs for the month you plan to recover it. Recalculate when your costs, prices or ad efficiency change, because the answer moves with all of them.

In MerchantFlow

Profit on every order you sync

MerchantFlow connects to your Shopify or WooCommerce store and your ad accounts and works out profit on each order: product cost from your COGS, payment fees, shipping and fulfilment, and ad spend from Meta, Google, TikTok and Snapchat, with refunds netted out. Your P&L then takes off your fixed costs for net profit.

See the real-time P&L

Common Questions

Break-even point: FAQ

How do you calculate the break-even point?

Divide your fixed costs by what each sale contributes after its variable costs. For an online store, one order is the sale: with 3,000 of monthly fixed costs and a contribution of 33.25 per order, break-even is 3,000 / 33.25 = 90.2, rounded up to 91 orders a month.

What is the break-even point formula?

Break-even orders = fixed costs / contribution per order, where contribution per order is the average order value minus the costs that grow with each order. Break-even revenue = break-even orders x average order value, which is the same as fixed costs divided by the contribution margin ratio before rounding.

Why are break-even orders rounded up?

Part of an order does not exist. At 90.2 orders you are still short of covering your fixed costs, so the first whole number that covers them is 91. The revenue card shows both the whole-order figure and the figure before rounding.

What is margin of safety?

It is how far your orders can fall before you stop covering fixed costs, as a share of current orders: (current orders - break-even orders) / current orders. A higher margin of safety means a bigger buffer. A negative one means you are below break-even.

Should ad spend be a fixed or a variable cost?

It depends on how you run it. If spend scales with the orders you buy, treat it as a cost per order. If you commit a flat monthly budget regardless of orders, treat it as a fixed cost. Count it once, in one place, or the break-even point will be overstated.

What is the difference between break-even point and break-even ROAS?

The break-even point is the number of orders that covers your fixed costs. Break-even ROAS is the return on ad spend at which an ad campaign stops losing money. They answer different questions: one for the whole business, one for advertising.

How do I include a profit target?

Enter it in the target profit field. The calculator adds it to your fixed costs and divides by contribution per order: (fixed costs + target profit) / contribution per order, rounded up. The result is the orders, daily sales and revenue it takes to reach that profit.

What if the calculator says every order loses money?

It means the costs that grow with each order are as large as, or larger than, the order value, so each sale adds nothing towards fixed costs and more volume cannot fix it. Raise the order value or cut product, shipping, fee, refund or ad costs per order until contribution is positive.

Does this work for a single product?

Yes. Enter the product's price as the average order value and its cost as the product cost, and read orders as units. For a store with many products, use the average order value and average costs across your orders.

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