eCommerce break-even analysis is more complex than SaaS because you have both fixed costs (warehouse, staff, software) and variable costs (COGS, shipping, payment fees) that vary with each order.
eCommerce break-even formula
Break-even units = Fixed monthly costs ÷ (Selling price − COGS − Variable costs per order)
Example: $30 product, $12 COGS, $3 shipping, $1.20 payment fee:
- Contribution per order = $30 − $12 − $3 − $1.20 = $13.80
- Fixed costs $8,000/month → Break-even = 8,000 ÷ 13.80 = 580 orders/month
- Break-even revenue = 580 × $30 = $17,400/month
The impact of product margin on break-even
Low-margin products require dramatically more volume to break even:
| Gross Margin | Break-even at $8k fixed costs ($30 product) |
|---|---|
| 60% ($18) | 444 orders / $13,320 revenue |
| 46% ($13.80) | 580 orders / $17,400 revenue |
| 33% ($10) | 800 orders / $24,000 revenue |
| 20% ($6) | 1,333 orders / $40,000 revenue |
Contribution margin vs gross margin
Contribution margin includes all variable costs (shipping, payment fees, returns/refunds allowance). Gross margin only subtracts COGS. Always use contribution margin for break-even analysis — gross margin overstates your actual per-unit profit.
Use our Break-Even Calculator to model your exact numbers, and our Profit Margin Calculator to track gross vs operating margin as you scale.