1. Add up your fixed costs for the month
These are the expenses you pay whether you sell a lot or a little.
- Rent for your shop or workspace
- Internet and phone plan
- Fixed salaries, including your own
- Subscriptions and tools
- Advertising you pay for every month
2. Calculate the variable cost per unit
This is what each product sold costs you: raw materials or purchase price, packaging, payment processing fees, and the share of shipping you absorb.
3. Apply the formula
Break-even in units = fixed costs ÷ (selling price − variable cost per unit). The difference between price and variable cost is called the contribution margin: what each sale contributes toward covering fixed expenses.
4. See it with an example
Suppose your fixed costs total 6,000 a month, you sell each product for 150, and your variable cost is 90. Your margin per unit is 60. So 6,000 ÷ 60 = 100 units. With 100 sales you neither gain nor lose; from sale 101 onward you start earning.
5. If you sell many different products
Use the average price and cost of your sales, or calculate break-even in money: fixed costs ÷ margin percentage. If your average margin is 40%, you need to sell 15,000 to cover 6,000 in fixed costs.
6. Use the number to decide
If your break-even point looks out of reach, you have three paths: lower fixed costs, reduce the cost per unit, or raise the price. Recalculate whenever your costs change, and keep prices current in your Vallen catalog so the margin you calculated is the one you actually charge.
The break-even point isn't a formula just for accountants: it's the minimum your business needs to sustain itself. Calculate it today, make it your first goal of the month, and check each week how close you are.