AM Break-even is the point where your store stops losing money for the month. Below it, every sale only chips away at fixed costs. Above it, each sale adds real profit. This calculator shows where that line is for your store, how far past it you need to go for a profit goal, and how much ad spend each sale can carry before advertising loses money.
It runs in your browser with no sign-up. Use one product or an average across your catalog.
How to use the break-even calculator
- Enter your fixed costs per month: costs that stay the same whether you sell 10 units or 1,000, such as your store plan, apps, software, storage, salaries and a fixed ad retainer.
- Enter your price per unit: what the customer pays for one unit, after any usual discount.
- Enter your variable cost per unit, or build it from parts: product, shipping, packaging, payment and marketplace fees, and other. The parts add up into the variable cost field for you.
- Read the results: break-even units (rounded up), break-even revenue, contribution margin per unit and as a percentage of price, and break-even ROAS.
- Switch to Target profit and enter a monthly profit goal to see the units and revenue you need, and the profit you would make at that unit count.
How to calculate the break-even point
| Result | Formula | What it tells you |
|---|---|---|
| Contribution margin per unit | Price − variable cost | How much each sale adds toward fixed costs and profit. |
| Contribution margin ratio | Contribution margin ÷ price | The share of every dollar of revenue you keep after variable costs. |
| Break-even units | Fixed costs ÷ contribution margin per unit | Units you must sell each month to cover fixed costs, rounded up. |
| Break-even revenue | Fixed costs ÷ contribution margin ratio | Sales you need each month to reach zero profit. |
| Units for target profit | (Fixed costs + profit goal) ÷ contribution margin per unit | Units you must sell to hit your profit goal. |
| Break-even ROAS | 1 ÷ contribution margin ratio | The lowest ad return that does not lose money on a sale. |
In a spreadsheet, with fixed costs in B1, price in B2 and variable cost in B3, break-even units are =ROUNDUP(B1/(B2-B3),0) and break-even ROAS is =B2/(B2-B3).
Worked example: an established store
Your store has $2,400 a month in fixed costs. You sell a product for $45. Each unit costs $15 to buy, $7 to ship, $2 to pack and about $3 in payment fees, so the variable cost is $27.
- Contribution margin per unit: $45 − $27 = $18.
- Contribution margin ratio: $18 ÷ $45 = 40%.
- Break-even units: $2,400 ÷ $18 = 133.3, so 134 units.
- Break-even revenue: $2,400 ÷ 0.40 = $6,000.
- Units for a $3,000 monthly profit: ($2,400 + $3,000) ÷ $18 = 300 units.
Worked example: a new dropshipping store
Fixed costs are $300 a month (Shopify plan, a few apps and a domain). The product sells for $34.99. The supplier charges $9 plus $5 shipping, and payment fees are about $1.31, so the variable cost is $15.31 and each sale contributes $19.68, a 56.2% ratio. Break-even is 16 units a month ($533 in revenue), which looks easy, but break-even ROAS is 1.78. If ads return only $1.50 per $1 spent, each ad-driven sale loses money no matter how many you make.
Break-even ROAS for ads
ROAS (return on ad spend) is revenue from ads divided by ad spend. Break-even ROAS is the point where the contribution margin from an ad-driven sale exactly pays for the ad. The formula is 1 divided by the contribution margin ratio.
In the first example, the ratio is 40%, so break-even ROAS is 1 ÷ 0.40 = 2.5. For every $1 of ad spend you need $2.50 in revenue just to cover the ad and the variable costs of the orders. A campaign at ROAS 3.0 makes a small contribution, and a campaign at ROAS 2.0 loses money on every sale, even if the ad dashboard shows plenty of revenue.
| Contribution margin ratio | Break-even ROAS | Maximum ad cost per sale on a $50 product |
|---|---|---|
| 20% | 5.00 | $10 |
| 30% | 3.33 | $15 |
| 40% | 2.50 | $20 |
| 50% | 2.00 | $25 |
| 60% | 1.67 | $30 |
The last column is your break-even cost per purchase: the contribution margin per unit. Spend more than that to win a sale and the sale loses money.
Note: Break-even ROAS covers the ad and variable costs only. It does not pay your fixed costs. To grow profit, your ads need to run above break-even ROAS by enough to cover a share of fixed costs, or your organic sales need to cover them.
How long until startup costs are paid back
Break-even units cover monthly fixed costs. One-off startup costs, such as samples, product photos, a paid theme and your first inventory, are a separate question. Divide them by the monthly profit you expect once you are past break-even. In the first example, if you spent $3,600 to launch and sell 200 units a month, monthly profit is 200 × $18 − $2,400 = $1,200, so the launch costs take three months to recover. Use Target profit mode with the profit you need each month to plan that timeline.
Break-even vs ROI
Break-even means a return of 0%: you get back exactly what you spent. A 100% ROI means you doubled your money, which is well past break-even. The same confusion happens with ads: a ROAS of 1.0 means ad revenue equals ad spend, which still loses money once you pay for the products you sold.
How to get accurate inputs
- Fees: payment processing and marketplace fees are variable, because they scale with each order. Use the Shopify fee calculator or the Etsy fee calculator to get the per-order amount.
- Shipping: if you offer free shipping, the full label cost is variable. If the customer pays shipping, include only the gap between what they pay and what you pay.
- Ad spend: leave it out of fixed costs if you want to use the break-even ROAS result. If you run a fixed monthly ad budget and do not track it per sale, include it in fixed costs instead, but not both.
- Returns: if 5% of orders come back and you lose $12 on each, add $0.60 per unit to variable costs.
- Your own time: if you want the store to pay you, add a monthly salary to fixed costs.
Who uses this calculator
- New store owners checking whether a business idea can cover its monthly costs.
- Dropshippers and media buyers setting a ROAS target before scaling ads.
- Makers and small brands deciding whether a price increase is worth it.
- Freelancers and consultants working out how many projects a month cover their overheads.
Best practices
- Run it per product line. A store average hides the products that never cover their costs.
- Test price changes here first. Raising the price from $45 to $49 in the example lifts the contribution margin to $22 and cuts break-even units from 134 to 110. The profit margin calculator shows the per-unit side.
- Recalculate when costs move. Supplier price increases, new shipping rates and new apps all shift the line.
- Apply price changes in bulk. Once you know which products need new prices, Bulk Edit Pro in AM Jarvis updates prices across a Shopify or WooCommerce store with a preview first and one-click revert if the test does not work out.
Troubleshooting
- "No sales volume breaks even". Your variable cost is equal to or higher than the price, so each sale loses money before fixed costs. Raise the price or cut variable costs.
- Break-even units look impossibly high. Check that ad spend is not counted in both fixed costs and the ROAS target, and that fixed costs are monthly, not yearly.
- The parts do not update the total. Typing in the variable cost field directly overrides the parts. Edit a part to rebuild the total.
Common mistakes
- Using gross margin instead of contribution margin. Product cost alone ignores shipping and fees, so break-even looks closer than it is.
- Counting a cost twice. If ad spend is in fixed costs, do not also judge ads against break-even ROAS.
- Rounding down break-even units. 133.3 units means you need 134.
- Using list price when you usually discount. If most orders use a 15% code, enter the price after the code. The discount calculator gives you that number.