Ecommerce Break-Even Point: Orders, Revenue & Formula

The ecommerce break-even formula

Contribution per order = Revenue per order − Variable cost per order Break-even orders = Monthly fixed costs ÷ Contribution per order

Worked example

The example order produces $80.00 of revenue and has $57.70 of entered variable costs, leaving $22.30 contribution — a 27.9% contribution margin. With $3,000 in fixed monthly costs, break-even is 135 orders, representing about $10,800.00 of revenue.

Fixed costs vs variable costs

Variable costs move with each order: COGS, fulfilment, payment fees, packaging and per-order CPA. Fixed costs exist even at zero orders: salaries, rent, software subscriptions, retainers and base plan fees. Put a cost on the wrong side and break-even volume becomes misleading.

Why contribution must be positive

If an order contributes zero or less after variable costs, no amount of additional volume can pay fixed overhead. The first task is to improve price or variable economics. The contribution margin guide explains that diagnostic.

Break-even revenue vs break-even orders

Orders are the operational target; revenue is the value of those rounded-up orders. Because a store cannot sell a fractional order, practical break-even revenue is usually slightly higher than the continuous mathematical result.

Frequently asked questions

Does break-even include owner salary?

Include it in fixed monthly costs if you want the business to cover that salary before you call the month break-even.

Should CPA be included?

Yes when paid acquisition is a normal variable cost per order. If you are modelling organic orders, use zero or a blended acquisition cost appropriate to your traffic mix.

Can I use average order value?

Yes, as long as the variable costs entered are also averages for the same order mix. Segment products separately when their margins differ substantially.