Break-even analysis estimates the sales volume at which contribution equals fixed costs.
Build the inputs
Classify costs by how they behave over the relevant volume range. Calculate unit contribution as selling price minus variable unit cost. Divide fixed costs by unit contribution and round up.
Stress-test the result
Run lower-price, higher-cost and lower-volume scenarios. Add step-fixed costs when exceeding capacity requires another employee, warehouse or software tier.
For a multi-product store, use a weighted average contribution based on expected sales mix. Recalculate when that mix changes materially.
Sources
This guide is educational and does not provide financial, accounting, tax or legal advice.