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Free Break-Even Calculator

Calculate units needed to break even, find your break-even price, and model how cost or volume changes affect profitability.

Use this free break-even calculator to find the order volume or price needed to cover costs, model contribution margin, and stress-test scenarios for DTC and Shopify brands.

✓ Free to use ✓ No signup ✓ Built for DTC brands ✓ Updates in real time

📊 Your Numbers

Monthly Fixed Costs

Rent, software, salaries, insurance, subscriptions — costs that don't change with sales

Variable Cost per Unit

COGS + shipping + packaging + payment processing per unit

Selling Price per Unit

What the customer pays

Ad Cost per Unit / CPA (optional)

Average advertising cost per sale — added to variable costs

Monthly Target Profit (optional)

How much profit do you want beyond break-even?

📈 Your Results

Break-Even Point

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Enter your numbers to calculate

Break-Even Revenue

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Contribution / Unit

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Contribution Margin

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Break-Even ROAS

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Units for Target Profit

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Revenue for Target Profit

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Break-even formula: Break-Even Units = Fixed Costs ÷ (Price − Variable Cost per Unit).
Contribution Margin = Price − Variable Cost. The dollar amount each unit contributes toward fixed costs.
Most DTC brands hit break-even at 60–75% of monthly capacity. Below that, you’re scaling unprofitably; above 90% you’re leaving margin on the table.
Three levers move break-even: raise price, lower variable cost (COGS / fulfillment / ad spend), or cut fixed costs.
Highest-leverage break-even fixes: bundles for AOV lift, lower COGS via volume contracts, lower CAC via creative + retention.

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DTC Unit Economics by Vertical

Median variable cost, contribution margin, and typical break-even thresholds across DTC verticals.

Vertical	Median COGS %	Variable Cost % (incl. ad+fulfillment)	Contribution Margin %
Apparel & Fashion	30%	55%	45%
Beauty & Skincare	20%	50%	50%
Health & Supplements	25%	55%	45%
Food & Beverage	40%	65%	35%
Home & Garden	40%	62%	38%
Electronics & Tech	55%	72%	28%
Pet Products	35%	58%	42%
Subscription / Recurring	20%	45%	55%

Source: TGM client portfolio averages across 200+ DTC accounts. Variable cost includes COGS + payment processing + shipping + ad spend. Contribution margin = revenue minus variable cost. Higher contribution margin = lower break-even point.

Break-Even vs. Profit Margin vs. Markup vs. Payback — What you are actually measuring

Metric	What it measures	Formula	When to use it
Break-Even Point	Units (or revenue) needed to cover all fixed + variable costs	Fixed Costs ÷ (Price − Variable Cost)	Pricing decisions, capacity planning, runway math
Contribution Margin	Dollar amount per unit available to cover fixed costs	Price − Variable Cost per Unit	Per-order profitability + DTC scaling
Gross Margin	Percentage of revenue left after COGS	(Revenue − COGS) ÷ Revenue	Quick category profitability comparison
Markup	Percentage added to cost to set price	(Price − Cost) ÷ Cost	Pricing decisions from cost up
Payback Period	Months to recover CAC from gross profit	CAC ÷ Monthly Gross Profit per Customer	SaaS / subscription / repeat-purchase brands

Break-even uses contribution margin (not gross margin) because it accounts for all variable costs — including ad spend. A 60% gross margin product with 40% blended ad cost has only 20% real contribution margin.

What Is Break-Even Analysis and Why Does It Matter?

Break-even analysis tells you the exact volume (units sold or revenue earned) where total revenue equals total costs — the point where your business stops losing money and starts making it. Below break-even, every additional unit deepens losses. At break-even, you cover costs but earn no profit. Above break-even, every additional unit drops to the bottom line at your contribution margin rate. For DTC brands, break-even isn’t just a one-time milestone — you re-cross it every month based on fixed costs, ad spend pacing, and AOV trends.

The Break-Even Formula

Break-Even Units = Fixed Costs ÷ (Price − Variable Cost)

The denominator is your contribution margin per unit. Higher contribution margin = fewer units needed to break even. Variable cost should include COGS + payment processing + shipping + ad cost per acquisition (CPA). Don’t leave ad cost out — it’s a real per-order expense that pushes break-even higher.

How Break-Even Connects to Pricing, AOV, and CAC

The three biggest break-even levers are pricing, AOV, and CAC. Raising price by 10% with COGS held constant typically lowers break-even units 15–25%. Lifting AOV via bundles or upsells acts the same way without raising sticker price. Lowering CAC through better creative, broader audiences, or lifecycle email lifts contribution margin per order, which lowers break-even. The three levers compound: a 10% AOV lift + 10% lower CPA can cut break-even units 25–40%. Use this calculator to model each lever individually, then together.

What Is a Good Break-Even Threshold for DTC Brands?

Healthy DTC brands hit break-even at 60–75% of monthly capacity — meaning fixed costs are covered with room for variable margin to drop to bottom line. Brands stuck below 50% of capacity at break-even usually have one of three issues: (1) over-investing in fixed costs (team, tools, office) before revenue is large enough to absorb them, (2) under-pricing or running too-thin margins, or (3) bleeding too much variable cost into ad spend (CAC out of line with LTV). Subscription brands aim for break-even on the FIRST order of subscription LTV — not the first month of fixed-cost coverage. Use the LTV input scenario to model both cases.

Diagnose: why is your break-even point too far out?

Run through these in order. The first “yes” usually points at the highest-leverage fix.

If your contribution margin is below 30%

Variable costs are eating your margin. Audit COGS (negotiate volume contracts), payment processing (Stripe / Shopify Payments rates), shipping rates, and ad cost per order. Even 5 points of contribution margin recovery moves break-even substantially.

If fixed costs are above 35% of monthly revenue

Overhead is pushing break-even too far out. Audit team size vs revenue, software subscriptions, office / fulfillment center costs. Most DTC brands < $5M/year should run on < 30% fixed cost.

If AOV is below your category benchmark

Lower AOV = fewer dollars of contribution margin per order = higher break-even unit count. Bundles, free-shipping thresholds, post-purchase upsells (ReConvert / OneClickUpsell) typically lift AOV 15–30%.

If CAC is > 50% of contribution margin

Acquisition cost is consuming most of your unit profit. Use our CAC Calculator to benchmark. Fix CAC before scaling spend — better creative, retention email, brand search.

If you are pricing reactively (matching competitors)

Premium positioning and better creative often justify 10–25% higher prices than category median. Don’t leave margin on the table by competing on price alone — use our Profit Margin Calculator to model.

If you have not run a break-even check in 6 months

Fixed costs creep, COGS shifts, ad costs change. Re-run break-even every quarter (or monthly during high growth). Stale break-even math hides margin erosion.

10 ways to lower your break-even point this quarter

Tactics ordered by typical impact on break-even. Most can ship in a single sprint or quarter.

Lift AOV with a free-shipping threshold above current AOV. Adds 5–15% to AOV with no creative changes — lowers break-even units proportionally.
Add post-purchase upsells. Apps like ReConvert / OneClickUpsell typically add 8–15% AOV and lift contribution margin per order.
Negotiate volume COGS contracts. Even a 5-point COGS reduction at $1M+ in inventory drops break-even units 10–15%.
Audit shipping costs. Switch to ShipStation, ShipBob, or negotiate flat-rate USPS / UPS contracts. Most DTC brands overpay shipping by 15–25%.
Cut software subscription bloat. Audit Shopify apps + martech stack quarterly. Most $5M+ DTC brands have $2–5K/month of unused subscriptions.
Refresh creative to lower CPA. Better creative = lower CPA = lower variable cost per order = lower break-even. Use our CPA Calculator.
Raise prices selectively. Test 10% price increases on hero products. Most DTC brands have 5–15% pricing power they aren’t using.
Move fulfillment closer to customers. 3PLs in 2–3 zones (East / West / Central) cut shipping time + zone costs by 20–30%.
Layer in lifecycle email + SMS. Klaviyo welcome / abandoned cart flows lift LTV 15–25% with no ad-spend increase — effectively lowers blended CAC.
Renegotiate payment processing. Stripe / Shopify Payments default rates aren’t the lowest available. At $5M+, custom rates typically save 0.3–0.5% — meaningful at scale.

What this calculator cannot tell you

Time to break-even. The calculator solves for units; not the months it will take to reach those units. Layer in current sales velocity to model timeline.
Mix-shift effects. If you sell multiple products with different margins, blended break-even hides single-SKU profitability. Run separately by product line.
LTV / repeat-purchase contribution. Subscription / repeat-buyer brands often hit break-even on LTV — not first-order unit count. Use our LTV Calculator to model.
Working capital cycle. Even break-even brands can run out of cash if inventory + AR cycles are long. Pair break-even with cashflow modeling.

Break-even glossary

Break-Even Point (BEP): Sales volume where total revenue = total costs. Below = loss; above = profit. Formula: Fixed Costs ÷ Contribution Margin per Unit.
Contribution Margin: Revenue minus all variable costs per unit. The amount each sale “contributes” toward covering fixed costs. Pair with our Contribution Margin Calculator.
Fixed Costs: Expenses that don’t change with sales volume — rent, salaries, software, insurance. The numerator in the break-even formula.
Variable Costs: Per-order costs that scale with volume — COGS, payment processing, shipping, fulfillment, advertising. Higher variable cost = lower contribution margin = higher break-even.
Gross Margin: Revenue minus COGS, expressed as a percentage. Different from contribution margin (which includes ALL variable costs, not just COGS). See our Profit Margin Calculator.
Markup: Percentage added to cost to set price. Markup = (Price − Cost) ÷ Cost. Different from margin (which uses Price as denominator).
Margin of Safety: Difference between current sales and break-even sales. Higher margin of safety = more cushion before losses. Aim for 25%+.
Operating Leverage: How sensitive profit is to sales changes. High fixed costs + low variable costs = high operating leverage = profits scale fast above break-even.
Payback Period: Time to recover acquisition cost from gross profit. Common in subscription DTC. Healthy brands target < 12 months. Use our LTV:CAC Calculator.
CAC (Customer Acquisition Cost): Total marketing spend ÷ new customers acquired. Variable cost in the break-even calc. Lower CAC = lower break-even. Use our CAC Calculator.

We have helped 200+ DTC brands scale past break-even profitably

If your break-even point is too far out, we’ll show you the highest-leverage fixes — pricing, AOV, CAC, fixed costs — calc-driven, free, no obligation.

Book a Free Unit-Economics Audit →

Frequently Asked Questions

How do you calculate break-even point?

Break-Even Units = Fixed Costs ÷ (Price − Variable Cost per Unit). Example: $20,000 monthly fixed costs, $80 selling price, $35 variable cost per unit (COGS + shipping + payment + ad cost) = $20,000 ÷ ($80 − $35) = 444 units to break even. The calculator above does this instantly with optional ad cost and target profit inputs.

What is a good break-even point for DTC brands?

Healthy DTC brands hit break-even at 60–75% of monthly capacity. Below 50% means you’re scaling unprofitably (over-investing in fixed costs or running too-thin margins). Above 90% means you’re leaving margin on the table by under-investing in growth. Subscription brands aim for break-even on first-year LTV, not first-month fixed-cost coverage.

What’s the difference between break-even point and break-even price?

Break-even point answers “how many units do I need to sell at current price to cover costs?” Break-even price answers “at current volume, what price covers costs?” Most DTC brands solve both: hold price constant and target a unit volume, OR hold volume constant and back into a minimum viable price.

Should I include ad spend in variable costs?

Yes — ad spend is a real per-order variable cost. Most break-even mistakes come from omitting CAC. If you spend $30 in ads per acquired customer on an $80 product with $25 COGS, your true variable cost per unit is $55 (not $25). The calculator above has a dedicated CPA input to model this correctly.

How does AOV affect break-even?

AOV moves break-even directly. A 10% AOV lift (via bundles or upsells) raises contribution margin per order by roughly the same percentage, which lowers break-even units by 10%. Combined with stable variable costs, AOV is often the fastest break-even improvement lever — faster than COGS reduction or ad-spend optimization.

What is the difference between contribution margin and gross margin?

Gross margin = (Revenue − COGS) ÷ Revenue. Contribution margin = (Revenue − ALL variable costs) ÷ Revenue. Contribution margin is always lower because it includes payment processing, shipping, and ad spend — not just COGS. Use contribution margin (not gross margin) in break-even calculations to get a real answer.

How often should I run break-even analysis?

Every quarter at minimum. Monthly during high-growth phases or after pricing / cost changes. Fixed costs creep, COGS shifts, ad costs fluctuate seasonally. A break-even number from 6 months ago is usually outdated by 10–20%.

How do I lower my break-even point quickly?

Three biggest no-spend levers: (1) raise AOV with a free-shipping threshold or post-purchase upsell (5–15% typically), (2) cut unused software subscriptions / fixed costs, (3) refresh ad creative to lower CPA. Combined, these typically cut break-even units 20–35% in 30 days.

Does break-even include taxes?

Standard break-even is calculated before taxes. To find pre-tax break-even, use net operating costs. To find after-tax break-even, divide net operating costs by (1 − tax rate). Most DTC operators use pre-tax break-even for operational planning and only model after-tax for cash-flow forecasting.