Find exactly how many units you need to sell to cover all costs and start making real profit. Use Simple for a quick answer or Advanced for full analysis.
Break-even, contribution margin, return rates and more — explained for Indian e-commerce sellers.
The break-even point is the number of units you need to sell so that total revenue equals total costs. At break-even, profit is zero. Every unit sold beyond this point generates actual profit. Knowing it helps you decide whether a product is worth launching and what your minimum sales target must be.
Break-Even Units = Fixed Costs ÷ Contribution Margin per Unit. Contribution Margin = Revenue (excl. GST) minus all variable costs per unit — product cost, packaging, shipping, and platform commission. The formula works for any product once you have these numbers accurate.
Contribution margin is the money each unit contributes towards covering fixed costs and eventually profit. Formula: Revenue (excl. GST) − Variable Costs per Unit. A higher margin means fewer units needed to break even. This is the single most important number to optimise when pricing your product.
Platforms charge 18% GST on top of their commission fee before remitting payment. If commission is 5%, your actual deduction is 5.9% (5 × 1.18). Not accounting for this makes your break-even appear lower than it really is. The Advanced mode lets you toggle this on for accurate results.
Returns reduce effective revenue. At a 10% return rate you need to ship 11% more units to achieve the same net sales. Gross units needed = break-even ÷ (1 − return rate). For fashion and electronics in India where returns can hit 15–30%, this significantly inflates the actual number of units you need to ship and pack.
Margin of safety is the gap between your expected monthly sales and the break-even point. If you expect 100 units and break-even is 60, safety margin is 40 units or 40%. A margin below 15% is risky — small drops in sales or rising costs can push you into loss immediately. Above 30% is generally considered healthy.
A product that breaks even within 30 days of expected sales is generally healthy. If break-even requires 3–6 months, reconsider pricing or cost structure. For new launches, aim to break even in the first 1–2 months to manage cash flow risk effectively.