The Break-Even Point: How Many Units Must You Sell to Survive?

Most entrepreneurs obsess over "Revenue" or "Sales." But you can have $1 million in revenue and still go bankrupt. The most important number in your business isn't your top line—it's your Break-Even Point (BEP).

This is the exact moment where your business stops losing money and starts making it. It is the line between survival and failure.

If you don't know your number, you are flying blind. In this guide, we will break down exactly how to calculate it for e-commerce, how to find your "Ad Spend Break-Even," and how to lower that number to make your business safer.

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Step 1: Separate Your Costs

To calculate BEP, you cannot just look at "Total Expenses." You must separate your costs into two distinct buckets. Mixing these up is the #1 mistake beginners make.

Step 2: The Magic Formula

Before we find the total units, we need to find your Contribution Margin. This is the amount of money left over from a single sale after paying for the product itself. This leftover money is what "contributes" to paying off your rent and salaries.

Once you have that number, the formula is simple logic: "How many times do I need to earn that contribution margin to pay off my monthly bills?"

A Real World Example

Let's imagine you run a store selling Premium Yoga Mats.

• Selling Price: $60.00
• Variable Costs: $35.00 (Product: $15, Shipping: $10, Fees: $10)
• Contribution Margin: $25.00 ($60 - $35)

Your Fixed Costs are $5,000 per month (Rent, Software, Marketing Agency Retainer).

Calculation: $5,000 / $25 = 200 Units.

The Insight: You start every month $5,000 in the hole. You work for free for the first 200 sales. You only make your first dollar of real profit on sale #201.

Step 3: The "Ad Spend" Break-Even (ROAS)

In 2025, advertising is often the biggest cost. You need to know your Break-Even ROAS (Return on Ad Spend). This tells your media buyer exactly what target to hit.

First, calculate your Profit Margin percentage (before ads). Using the Yoga Mat example above:
($25 Margin / $60 Price) = 41% Margin.

Now, divide 1 by that percentage:
1 / 0.41 = 2.43 ROAS.

• If your Facebook Ads manager shows a ROAS of 2.0, you are losing money on every sale. Turn the ads off.
• If it shows 3.0, you are profitable. Scale up.

How to Lower Your Break-Even Point

A lower break-even point means your business is safer. It means you can survive a bad month. Here are 3 ways to lower it:

1. Raise Prices: Increasing price to $70 increases your contribution margin to $35. Now you only need to sell 142 units instead of 200. (See our Guide on Raising Prices).
2. Cut Variable Costs: Negotiate with suppliers or switch to lighter packaging to save on shipping. Saving $1 per unit adds up fast.
3. Cut Fixed Costs: Cancel unused software subscriptions. Do you really need that $300/mo heat-mapping tool? If it doesn't bring in sales, cut it.

FAQ

Does Break-Even include my salary?

It depends. If you pay yourself a fixed salary (e.g., $3,000/mo), treat it as a Fixed Cost. If you only take profit at the end of the year, do not include it in the calculation (but realize you are working for free until you pass the break-even point).

What if I have multiple products?

This gets tricky. You should calculate a "Weighted Average Contribution Margin." If 80% of your sales are T-shirts ($10 margin) and 20% are Hoodies ($30 margin), your average margin is roughly $14. Use that number for your overall business calculation.

How often should I calculate this?

Monthly. Your variable costs change (shipping rates go up) and your fixed costs change (you hire new apps). Re-calculate on the 1st of every month.

Conclusion

Business is not about "hope." It is about math.

Knowing your Break-Even Point gives you confidence. When you know you need exactly 200 sales to survive, you can build a marketing plan to get 200 sales. Without that number, you are just guessing.

Ready to find your number? Stop doing mental math. Use our calculator to plug in your fixed and variable costs instantly.