The break-even formula
Each sale first pays its own costs (materials, postage, platform fees). What is left is the contribution, and it goes toward your fixed costs. Once enough contributions add up to your fixed costs, you break even; every sale after that is profit.
Contribution per unit = price − variable cost
Break-even units = fixed costs ÷ contribution (rounded up)
Break-even revenue = fixed costs ÷ (contribution ÷ price)
Units for a profit goal = (fixed costs + profit goal) ÷ contribution
Break-even units = fixed costs ÷ contribution (rounded up)
Break-even revenue = fixed costs ÷ (contribution ÷ price)
Units for a profit goal = (fixed costs + profit goal) ÷ contribution
Example
| Line | Amount |
|---|---|
| Fixed costs per month | $500.00 |
| Price − variable cost ($25 − $10) | $15.00 contribution (60%) |
| Break-even units ($500 ÷ $15 = 33.3) | 34 units |
| Break-even revenue ($500 ÷ 0.60) | $833.33 |
| Units for a $1,000 profit ($1,500 ÷ $15) | 100 units ($2,500 revenue) |
Getting the inputs right
- Put every per-sale cost into the variable cost, including platform and payment fees. For Etsy, the Etsy fee calculator gives you the fee per order.
- Use the same period for everything. If fixed costs are monthly, the result is units per month.
- Should you pay yourself? If you want a wage, add it to the fixed costs or the profit goal; otherwise "break even" means working for free.
Frequently asked questions
What is a break-even point?
The number of sales (or the revenue) at which total income equals total costs, so you make neither a profit nor a loss.
Why is the number of units rounded up?
You cannot sell part of an item. 33.3 units means the 34th sale is the one that takes you past break-even.
What if the price is lower than the cost per unit?
Then each sale loses money and no number of sales can break even. Raise the price or cut the cost per unit first.
Last reviewed: November 2026 · By Muhammad Shujah