How to Calculate the Break-Even Selling Price
Your break-even price is the point where you neither gain nor lose. Selling below it costs you money on every order.
List every cost per item
- Product cost.
- Packaging and shipping you pay.
- Fixed fee per order, if any.
- Platform or payment fee as a percentage of the price.
The formula
Break-even price = Fixed costs per item ÷ (1 − fee percentage)
The fee is a share of the selling price, so it must be removed by dividing, not added on top.
Example
An item costs 10, packaging and shipping add 2, so fixed costs are 12. The platform takes 10% of the price. Break-even = 12 ÷ 0.90 = 13.33. At 13.33 the fee is 1.33 and you are left with exactly 12.
Adding a profit target
To keep 20% of the price as profit as well, divide by (1 − 0.10 − 0.20) = 0.70. So 12 ÷ 0.70 = 17.14. Check: 10% fee is 1.71, 20% profit is 3.43, and 12 + 1.71 + 3.43 = 17.14.
Tips
- Round prices up, never down.
- Include returns and discounts in your thinking.
- Update the numbers whenever fees change.
Why this protects you
Many sellers price by copying competitors and only notice losses at the end of the month. Working out the break-even price first gives you a floor. You can then decide how far to discount during a sale without selling at a loss. If a rival is below your floor, it is usually better to let that sale go than to match it.
Try it yourself
Use our free profit and loss calculator to check your numbers instantly.