What is a Break-Even Point (BEP)?

The Break-Even Point (BEP) is the exact sales volume at which total gross revenue equals total expenses (Fixed Costs + Variable Costs), resulting in zero net profit or loss.

How is target profit volume calculated?

Target Profit Volume (Units) = (Fixed Operating Costs + Target Profit Goal) / Contribution Margin per Unit.

What is a Contribution Margin and Contribution Margin Ratio?

Contribution Margin (CM) = Selling Price − Variable Cost. The CM Ratio (%) = CM / Selling Price, representing the fraction of each dollar that pays down fixed costs.

How do multi-product sales mixes affect break-even analysis?

In multi-product businesses, break-even is determined by the Weighted Average Contribution Margin across all products based on their relative sales mix percentage.

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Break-Even & Target Profit Calculator

Find the exact sales volume needed to cover your operating costs and hit your target profit. Test single products, multi-item sales mixes, and platform fees across Etsy, Shopify, and Amazon.

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Desired Monthly Target Profit ($)

Selling Price Per Unit ($)

Variable Cost Per Unit ($)

Expected Sales Velocity (Units / Month)

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Break-Even vs. Cash Runway

Break-even tells you if your unit economics make sense. It does not guarantee you have enough cash in the bank to survive until sales ramp up. Check your cash runway & burn rate →

Visual Break-Even Curve

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⚠️ The Most Common Break-Even Mistake

Never divide fixed costs by your selling price. That only works if producing your product costs zero dollars. You must divide fixed costs by your contribution margin (price minus variable costs and platform fees). Dividing by price ignores your cost of goods and severely understates the sales you need to stay afloat.

Frequently Asked Questions

What does the break-even point actually tell me? ▾

It marks the point where your total revenue equals your total expenses. You make zero profit, but you lose zero dollars. Every unit sold past this threshold directly creates net profit.

Why does contribution margin matter more than markup? ▾

Contribution margin is the cash left over from each sale after paying the direct costs to make and ship that item. That leftover cash is what pays your rent, software, and salaries. If your contribution margin is too thin, no amount of sales volume will keep the business alive.

How does selling multiple products change my break-even target? ▾

When you sell multiple items at different prices and profit margins, your break-even shifts based on your sales mix. Selling more of your high-margin products lowers the total number of orders you need to cover your monthly overhead.

Does this calculation include business taxes? ▾

No. Standard break-even models measure operating profit before corporate income taxes. Because tax liabilities depend on your business structure and annual deductions, factor in an extra safety margin or treat your target profit as pre-tax income.