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Break-even point for online sellers: formula, example, and how to lower it

Updated October 28, 2026 · SellerSheetKit Guides

Your break-even point is the number of sales you need each month before the shop starts making money. Below it, every month costs you. Above it, each extra order adds real profit. Knowing the number turns a vague goal like "sell more" into a specific target.

Two kinds of costs

Step 1: Find your contribution margin per order

Contribution margin is what each order leaves over after its own variable costs. That is the amount available to pay down fixed costs.

Contribution margin = average order value − variable costs per order

Step 2: Divide fixed costs by contribution margin

Break-even orders per month = monthly fixed costs ÷ contribution margin per order

Round up, since you cannot sell part of an order.

Worked example

Illustrative figures only.

LineAmount
Average order value$32.00
Product cost (COGS)−$9.50
Packaging and shipping you pay−$5.00
Marketplace and payment fees−$3.50
Contribution margin per order$14.00
Monthly fixed costs (software, tools, ads)$280.00
Break-even orders$280 ÷ $14 = 20 orders

This shop needs 20 orders a month to cover its costs. Order 21 onward earns about $14 each, so 50 orders would mean roughly 30 × $14 = $420 of profit.

Break-even in revenue

If you think in sales dollars rather than orders, divide fixed costs by your contribution margin percentage.

Break-even revenue = fixed costs ÷ (contribution margin ÷ average order value)

In the example: $280 ÷ ($14 ÷ $32) = $280 ÷ 0.4375 = $640 in monthly sales.

How to lower your break-even point

Check it every month

Costs and fees move, so recalculate break-even when you update your monthly P&L. If you sell on more than one channel, work out contribution margin per channel, since fees differ and one channel may be carrying the others. Educational content only, not financial or tax advice.

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SellerSheetKit is not affiliated with Etsy, Shopify, or Amazon. Fee figures are summarized from official sources on the date above and can change; verify against your seller account. Educational content only — not tax, legal, or accounting advice.