Find the order volume at which an online store covers all its fixed costs.
Advertising is a variable cost per order in ecommerce, so it belongs in contribution rather than fixed costs. If contribution per order is negative no volume ever reaches break-even, which is the case this calculation makes obvious. Stores frequently scale advertising while contribution per order is negative, which makes losses grow in direct proportion to revenue.
Ecommerce Break-Even
Break-even orders = fixed costs ÷ (order value × gross margin − advertising per order)
Break-even orders = fixed costs ÷ (order value × gross margin − advertising per order) Advertising is a variable cost per order in ecommerce, so it belongs in contribution rather than fixed costs. If contribution per order is negative no volume ever reaches break-even, which is the case this calculation makes obvious.
Stores frequently scale advertising while contribution per order is negative, which makes losses grow in direct proportion to revenue.
This calculator takes 4 inputs: Fixed costs per month, Average order value, Gross margin after product and shipping cost, Advertising cost per order. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.