Lesson 4: How to Calculate Your Break-even Point

Your break-even point is a critical number that every Ecommerce founder should know, as it can help you set goals and assist with budgeting decisions.

The break-even point is a formula to help you understand what are the sales required in your business to break-even. No losses, no profit - just enough sales to get by.

The break-even point is important as it can help you answer those budgeting questions, like:

If my business isn’t profitable = how many sales do I need to be profitable?

• If I want to hire a new employee, say a warehouse manager, how many extra sales do I need to cover the cost of their salary?
• How will changes in my advertising spend and gross profit margin change my break-even sales point?

In this module we share the break-even point formula and how to calculate it in your business.