Chartered Financial Analyst and e-commerce consultant specializing in supply chain and ad-spend optimization.
Find out how many units you must sell per month to cover your dropshipping store’s fees and ad costs. Enter any three variables—Total Monthly Fixed Costs, Sale Price, Variable Cost per Unit, or Units Sold—to solve for the fourth.
Dropshipping Breakeven Calculator
Dropshipping Breakeven Formula
The breakeven formula for a dropshipping product finds the number of units (Q) you must sell each month for your total sales revenue to equal all fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Sale Price per Unit (P):
P = (F / Q) + V
Solve for Variable Cost per Unit (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total monthly overhead (e.g., Shopify plan, app subscriptions, domain fees).
- Sale Price per Unit (P): The final price the customer pays for your product.
- Variable Cost per Unit (V): ALL costs per-sale: Product Cost (from supplier) + Transaction Fees + Ad Cost Per Sale (CPA).
- Breakeven Units Sold (Q): The number of units you must sell per month to reach $0 in profit.
Related Calculators
- Ad Campaign (PPC) Breakeven Calculator
- E-commerce Breakeven Calculator
- ROAS Calculator (Return on Ad Spend)
- Shopify Profit Margin Calculator
What is a Dropshipping Breakeven Point?
A **Dropshipping Breakeven Point** is the number of units a seller must sell each month to cover their total costs. This calculation is unique because it must account for advertising costs *per sale* as a variable cost, not a fixed one.
**Fixed Costs (F)** are your monthly subscription fees. This is your Shopify plan, your domain name, and any apps you pay for (e.g., email marketing, tracking apps). These costs are the same whether you sell 0 units or 1,000 units.
**Variable Costs (V)** are the costs incurred for *every single sale*. This is the most critical number in dropshipping. (V) is the sum of: 1) The product’s Cost of Goods Sold (COGS) from your supplier, 2) Payment processing fees (e.g., 2.9% + $0.30), and 3) Your **Cost Per Acquisition (CPA)**, which is the average amount of ad spend it takes to get one sale.
The **Contribution Margin** (P – V) is your net profit on one sale *before* paying your fixed monthly store fees. This calculator finds how many sales, each contributing this margin, are needed to pay for your monthly fixed costs.
How to Calculate Dropshipping Breakeven (Example)
Let’s calculate the breakeven point for a new dropshipping product.
-
Identify Monthly Fixed Costs (F):
Your Shopify Basic plan ($39) and various apps ($61) cost $100.00 per month.
-
Identify Sale Price per Unit (P):
You are selling your product for $49.99.
-
Identify Variable Cost (V):
Product Cost (COGS) is $15.00. Transaction fees are $2.50. Your average Cost Per Acquisition (CPA) from ads is $12.50.
Total (V) = $15.00 + $2.50 + $12.50 = $30.00 -
Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per unit: $49.99 (P) – $30.00 (V) = $19.99.
Next, divide the fixed costs by this margin:
Q = $100.00 / $19.99 ≈ 5.002 -
Conclusion:
You must sell 6 units per month (rounding up) just to cover your monthly store fees and start making a profit.
Frequently Asked Questions (FAQ)
Your Variable Cost (V), specifically your Cost Per Acquisition (CPA). Most sellers fail because their CPA is too high, making their (V) higher than their (P). You must get your ad cost per sale lower than your product margin (P – COGS – Fees).
No, this is a common mistake. It’s better to calculate your *average CPA* (Total Ad Spend / Total Sales) and include that in (V). This scales the ad cost with each sale, giving you a truer breakeven point *per unit*.
To be conservative, you should add an estimated cost for this into your (V). If 5% of your orders are refunded, you can add 5% of your COGS to your (V) to account for this expected loss.
Work backward. You know your (P) and COGS/Fees. Decide on a breakeven (Q) (e.g., 10 units) and your (F) (e.g., $100). Solve for (V): `V = P – (F / Q)`. If `V` is $30, and you know your COGS+Fees are $17.50, then your maximum affordable CPA is $12.50 ($30 – $17.50).