How to use the break-even calculator
- Enter your fixed costs. These are the costs you pay for the period whether you sell anything or not: platform subscriptions, software, studio rent, insurance, equipment repayments and any fixed amount you want to pay yourself. Use the same period throughout, usually one month.
- Enter the selling price per unit. This is what the customer pays for one typical order. If you charge shipping separately, include it here, because marketplace fees are usually charged on the order total.
- Enter the variable cost per unit. Add up everything one more sale costs you: materials, packaging, the postage label and any per-piece labour.
- Add fees. Enter marketplace and payment fees that are a percentage of the price, plus any flat fee per order. Our Etsy fee calculator shows the exact fees for a given price and country if you are not sure.
- Optional: add a target profit or your expected sales. The calculator then shows how many units you need for that profit, the profit you would make at your expected volume and your margin of safety.
Results update as you type. Press Load example to see the worked example below, and Copy results to paste a summary into a spreadsheet, a note or an email.
The break-even formula
Break-even is the point where total sales exactly cover total costs, so profit is zero. The calculation has two steps:
Contribution per unit = price − variable cost − fees
Break-even units = fixed costs ÷ contribution per unit
The contribution is the amount each sale has left over, after paying for itself, to put towards fixed costs and then profit. Because you cannot sell part of an order, the calculator rounds the break-even units up to the next whole number and also shows the exact figure. Break-even revenue uses the contribution margin ratio, which is contribution divided by price:
Break-even revenue = fixed costs ÷ contribution margin ratio
Units for a target profit = (fixed costs + target profit) ÷ contribution per unit
Worked example
A small online shop sells a bag for 50 plus 10 shipping, so the customer pays 60 per order. Materials and packaging cost 15 and postage costs 8, so the variable cost is 23. Fees are 9.5% of the order total plus 0.45 per order, which is 6.15 on a 60 order. Fixed costs are 150 a month.
- Contribution per unit: 60 − 23 − 6.15 = 30.85
- Contribution margin ratio: 30.85 ÷ 60 = 51.42%
- Break-even units: 150 ÷ 30.85 = 4.86, rounded up to 5 orders a month
- Break-even revenue: 150 ÷ 0.5142 = about 291.73
- For a profit of 500: (150 + 500) ÷ 30.85 = 21.07, so 22 orders
- At 20 expected orders: profit = 20 × 30.85 − 150 = 467, and the margin of safety is (20 − 4.86) ÷ 20 = 75.7%
The fee figures in this example follow Etsy's published US rates at the time of writing (a 6.5% transaction fee and 3% + 0.25 payment processing, plus the 0.20 listing fee). Fees vary by country and change over time, so use your own numbers. Our guide to break-even analysis for a small business walks through the same example step by step.
What the margin of safety tells you
The margin of safety is how far your expected sales could fall before you start losing money, as a percentage of expected sales. A margin of safety of 75% means sales could drop by three quarters and you would still cover your costs. A small or negative margin of safety is a warning sign: a quiet month, a price war or a rise in postage could push you into a loss. Raising the price, cutting variable costs or trimming fixed costs all increase it.
Fixed or variable? Common sorting questions
- Advertising: a fixed monthly budget is a fixed cost. A commission charged only on sales that ads bring in, such as Etsy Offsite Ads, is a variable cost on those orders.
- Your own time: if you want to earn a set amount each month, add it to fixed costs. Otherwise break-even only shows when you stop losing money, not when the work pays you.
- Listing fees: a flat fee charged once per sale, such as Etsy's listing fee when a listing renews after an item sells, can go in the fixed fee per order.
- Cost of goods: materials and stock used per item are variable. Our guide to calculating cost of goods sold explains how to work out a reliable cost per unit.
Using break-even to make decisions
Break-even is most useful for comparing choices. Before adding a new subscription, divide its monthly cost by your contribution per unit to see how many extra sales it needs to pay for itself. Before running a sale, recalculate with the discounted price: contribution usually falls much faster than the price does, so the number of orders you need rises sharply. The sale and discount calculator shows this for a single product, and the profit margin calculator works out the price you need for a target margin. To set a sensible starting price from materials, labour and overheads, use the product pricing calculator.
If you sell many products at different prices, use an average order value and an average variable cost per order, and recalculate when your product mix changes. The result is an estimate for planning, not a forecast, and it is only as accurate as the costs you enter.
Want the full explanation? Read our guide: How to calculate break-even for a small online business.
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Frequently asked questions
What is a break-even point?
It is the number of units, or the amount of sales, at which your total revenue equals your total costs, so you make neither a profit nor a loss. Every sale after the break-even point adds its contribution to profit.
How do I calculate break-even units?
Subtract the variable cost and fees of one sale from its price to get the contribution per unit, then divide your fixed costs by that contribution. With fixed costs of 150 and a contribution of 30.85, break-even is 150 ÷ 30.85 = 4.86, so 5 units.
Why does the calculator say there is no break-even point?
If the variable cost and fees of one sale are equal to or more than its price, each sale loses money or makes nothing, so selling more can never cover your fixed costs. Raise the price or lower the cost per unit until the contribution is positive.
Should I include shipping in the selling price?
Include any shipping you charge the customer in the price, and the postage you pay in the variable cost. Marketplaces such as Etsy charge their transaction and processing fees on the order total, including shipping, so this keeps the fee calculation accurate.
Is my data saved or sent anywhere?
No. The calculator runs entirely in your browser. The numbers you enter are not sent to our server or stored.