Break-even check: test contribution before a new product push
Before spending on inventory, ads, or equipment, calculate whether each sale contributes enough to cover fixed costs.
Break-even depends on contribution per sale. If price minus variable cost is too small, the sales volume needed may be unrealistic.
List fixed costs first
Include launch costs that do not change with each order, such as equipment, subscriptions, design, campaign setup, or a minimum production run.
Keep variable cost honest
Materials, packaging, fulfillment, platform fees, hourly labor, and payment fees often move with each sale and should be reflected in the variable cost.
Compare break-even with capacity
A result of 75 sales may be fine if the business can deliver 100. It is a warning sign if capacity, demand, or cash flow makes that volume unlikely.