Calculate exactly how many orders you need per month to cover all costs and reach profitability.
Platform fees, staff, warehouse, tools, subscriptions (not per-order costs)
Average revenue per order
Product cost per average order
Shipping + pick & pack per order
Payment processor fee (e.g. 2.9% for Stripe)
Return rate × cost per return (amortised across all orders)
Breakeven Orders = Fixed Costs ÷ (AOV − COGS − Shipping − Fees − Returns)In plain English
Contribution margin = AOV − variable costs. Breakeven orders = fixed costs / contribution margin.
Worked Example
$8K fixed ÷ ($90 AOV − $32 COGS − $9 shipping − $2.61 fees − $3 returns) = $8K ÷ $43.39 = 185 orders/month.
Fixed costs are what you pay regardless of orders: Shopify, warehousing, staff salary, and tools. Variable costs scale with every order: COGS, shipping, payment fees, and returns. Understanding both is essential for pricing and growth planning.
Most e-commerce businesses reach profitability between 200–2,000 orders per month depending on AOV and margins. The higher your contribution margin per order, the fewer orders you need to cover fixed costs.
| Category | Typical CM% | Breakeven (at $5K fixed) | Margin Target | Status |
|---|---|---|---|---|
Beauty / Health | 35–50% | 130–190 orders | 15% net margin | |
Apparel | 25–40% | 150–260 orders | 10–15% net | |
Electronics | 15–25% | 250–400 orders | 5–10% net | |
Supplements | 45–65% | 90–160 orders | 20%+ net |
Source: Shopify Commerce Trends 2025 · Profitwell DTC Margin Study
Not including ad spend in variable cost calculation
For paid-traffic-dependent stores, ad spend is a per-order variable cost (CAC). Include it in your contribution margin calculation to get a realistic breakeven.
Using gross margin instead of contribution margin
Gross margin = revenue − COGS. Contribution margin = revenue − COGS − shipping − fees − returns. Use contribution margin for breakeven: it includes all variable costs, not just product cost.
Not recalculating breakeven as fixed costs change
Adding a full-time staff member or upgrading to a bigger 3PL increases fixed costs and raises your breakeven. Recalculate every time fixed costs change by >10%.