Your break-even point is the number of units you have to sell for your store to neither make nor lose money. You calculate it by dividing your monthly fixed costs by the contribution margin on each sale: Fixed costs ÷ (Price − Variable cost per unit). Below that number, every month closes in the red.
Most founders scale ads without knowing this:
How much do I need to sell to not lose money?
That number has a name.
It's called the break-even point.
If you don't know it, every peso you put into advertising is a bet.
And in LATAM e-commerce, betting usually costs you.
- What the break-even point is in e-commerce.
- How to calculate it step by step.
- A real example with simple numbers.
- Common mistakes that distort it.
- How to use it to scale without running out of cash.
⚡ TL;DR — The key idea
The break-even point is the level of sales where you neither make nor lose money.
Everything below it is a loss.
Everything above it is real profit.
If you don't know that number, you don't know how much you can spend on ads.
1) What the break-even point is in e-commerce
It's the minimum level of sales you need to cover:
- Product costs.
- Advertising.
- Shipping.
- Payment fees.
- Fixed costs (salaries, tools, rent).
Until you get past that point, your business doesn't generate profit.
2) The break-even point formula
First you need two things:
- Contribution margin per unit.
- Total monthly fixed costs.
Break-even point (units) = Fixed costs / Contribution margin per unit
The contribution margin per unit is simply price − variable cost per unit. So the full break-even formula, written on a single line, is:
Break-even point (units) = Fixed costs / (Price − Variable cost per unit)
| Selling price | Variable cost per unit | Contribution margin | Fixed costs for the month | Break-even point |
|---|---|---|---|---|
| $20,000 | $12,000 | $8,000 | $800,000 | 100 units |
| $20,000 | $14,000 | $6,000 | $800,000 | 134 units |
| $30,000 | $18,000 | $12,000 | $800,000 | 67 units |
| $30,000 | $22,000 | $8,000 | $800,000 | 100 units |
Look at the second row: same price, variable cost up by only $2,000 ARS — and you need 34 more sales just to break even. Your break-even point does not drift when your variable cost rises. It jumps.
If you want to see it in revenue (break-even point in pesos):
Break-even point ($) = Units needed × Average price
3) A practical example
Let's assume:
- Average price: $50,000
- Total variable cost per unit: $35,000
- Contribution margin: $15,000
- Monthly fixed costs: $3,000,000
So:
3,000,000 / 15,000 = 200 units
You need to sell 200 units per month just to not lose money.
Only after that do you start making money.
4) Common mistakes when calculating it
- Not including advertising in variable cost.
- Underestimating returns.
- Forgetting taxes.
- Using wrong average costs.
- Not updating it when prices change.
If the calculation is wrong, your whole growth plan is wrong.
5) How to use the break-even point to scale
This number lets you answer key questions:
- Can I raise my ad budget?
- Am I growing or just moving cash around?
- How much margin do I have to reinvest?
- Does this new product actually help the business?
Scaling without knowing your break-even point is flooring it with no dashboard.
Frequently asked questions
What is the break-even point?
It's the level of sales where you neither make nor lose money: your revenue exactly covers all your fixed and variable costs. Below it you lose money, above it you start making money.
What is the break-even point formula?
Break-even point (in units) = Fixed costs / (Price − Variable cost per unit). The denominator is the contribution margin per unit. To see it in pesos, multiply those units by the average price.
How do you calculate the break-even point in units?
Divide your monthly fixed costs by the contribution margin of each unit. If you have $3,000,000 in fixed costs and each sale leaves $15,000 in margin, your break-even point is 200 units per month.
What happens if I don't include advertising in the calculation?
You get a false break-even point, lower than the real one. In e-commerce, advertising is just another variable cost: if you leave it out, you'll think you're profitable sooner than you really are.
6) So… where does Escalafy come in?
Escalafy automatically calculates:
your real margin and your break-even point in real time.
- Real margin by product.
- Real impact of ads.
- Costs integrated automatically.
- Daily profit without Excel.
Selling isn't growing.
Growing is getting past your break-even point with margin.
If you don't know today how much you need to sell to make money, you're not running a business. You're improvising.
Keep reading
Contribution margin in e-commerce: formula and practical example
Read E-commerce FinanceCash flow: what it is, how to calculate it and how to forecast it (with an example)
Read E-commerce FinanceHow to calculate your e-commerce profitability step by step (without fooling yourself)
ReadWhat Escalafy does for your store
Connect your channels and see the truth behind your numbers. No Excel, in real time.