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eCommerce Break-even Point Calculator
Useful
Why it's useful to use
The Break-even Point calculator is an essential tool for eCommerce entrepreneurs to determine how many units of a product they need to sell to cover all costs and start making a profit. It helps you understand the relationship between fixed costs, pricing, and variable costs, providing a clear target for your sales goals. By knowing your break-even point, you can set realistic sales targets, adjust pricing strategies, and assess the viability of new products.
Formula
How the tool works
The break-even point is calculated by dividing the total fixed costs by the difference between the price per unit and the variable cost per unit. The formula is:
Break-even Point = Fixed Costs / (Price per Unit – Variable Cost per Unit)
This tells you how many units you need to sell to cover your fixed costs. For example, if your fixed costs are $10,000, the price per unit is $50, and the variable cost per unit is $30, the break-even point would be:
Break-even Point = 10,000 / (50 – 30) = 500 units
Once you reach this sales volume, your business will start to generate profit. This helps you understand how much you need to sell before making a profit, which is crucial for planning and financial forecasting.
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