Every e-commerce business needs to know their break-even point — the exact number of units they need to sell before they start making a profit.
The Break-Even Formula
Break-Even Units = Fixed Costs ÷ (Selling Price - Variable Cost per Unit)
Example: - Monthly fixed costs: $500 (Shopify + apps + tools) - Selling price: $40 - Variable costs per unit: $22 (COGS + shipping + fees) - Break-even = $500 ÷ ($40 - $22) = **28 units/month**
You need to sell 28 units per month just to cover your costs. Everything after that is profit.
E-commerce Fixed vs Variable Costs
| Fixed Costs (Same Every Month) | Variable Costs (Per Order) |
|---|---|
| Shopify subscription | Cost of goods sold |
| App subscriptions | Shipping per order |
| Warehouse rent | Transaction fees |
| Website hosting | Packaging |
| Insurance | Ad cost per acquisition |
| Salaries | Returns processing |