Chartered Financial Analyst specializing in e-commerce and small business finance.
Find out how many craft items you need to sell per month to cover your costs. Enter any three variables—Monthly Fixed Costs, Avg. Item Price, Avg. Variable Cost per Item, or Breakeven Items—to solve for the fourth.
Craft Business Breakeven Calculator
Craft Business Breakeven Formula
The breakeven formula for a craft business finds the number of items (Q) you must sell each month for total revenue to equal all fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Item Price (P):
P = (F / Q) + V
Solve for Avg. Variable Cost per Item (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total, recurring monthly overhead (e.g., studio rent, website/Etsy fees, software subscriptions, insurance).
- Avg. Item Price (P): The average price you sell one craft item for.
- Avg. Variable Cost per Item (V): The average cost of raw materials, packaging, shipping, and platform transaction/listing fees for *one item*.
- Breakeven Items (Q): The total number of items you need to sell to reach $0 in monthly profit.
Related Calculators
- Etsy Seller Breakeven Calculator
- E-commerce Breakeven Calculator
- Boutique Breakeven Calculator
- Product Breakeven Calculator
What is a Craft Business Breakeven Point?
A **Craft Business Breakeven Point** is the number of individual items (Q) you must sell per month to cover all your business expenses. This is the minimum sales volume you need to hit before you actually start making a profit.
**Fixed Costs (F)** are your monthly “overhead.” These are the expenses you pay no matter what, even if you don’t sell a single item. This includes rent for your studio or workspace, flat monthly fees for your website or selling platform (like Shopify), and any software you use for design or accounting.
**Variable Costs (V)** are the costs tied *directly* to each item you sell. This is the most critical number for a craft business to know. It includes all raw materials (e.g., clay, yarn, beads, wood), packaging (boxes, labels, bubble wrap), shipping costs, and any per-item fees (like Etsy’s transaction and listing fees).
The **Contribution Margin** (P – V) is the profit from a single item that goes toward paying off your monthly fixed costs. If you sell a mug for $45 (P) and your materials, shipping, and fees cost $15 (V), your contribution margin is $30. This calculator finds how many $30 “chunks” of profit you need to cover your total fixed costs.
How to Calculate Craft Business Breakeven (Example)
Let’s calculate the breakeven point for an Etsy seller making handmade pottery.
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Identify Monthly Fixed Costs (F):
The seller has $300 in monthly studio rent and website fees.
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Identify Avg. Item Price (P):
The average mug sells for $45.
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Identify Avg. Variable Cost (V):
The average cost of clay, glaze, shipping, packaging, and Etsy fees per mug is $15.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per mug: $45 (P) – $15 (V) = $30.
Next, divide the fixed costs by this margin:
Q = $300 / $30 = 10 -
Conclusion:
The seller must sell 10 mugs each month to cover all costs and start making a profit.
Frequently Asked Questions (FAQ)
You have two options: 1) Pay yourself a monthly “salary” and include it in your **Fixed Costs (F)**. This is the best way. 2) Pay yourself an hourly wage for *making* the item and add that to **Variable Costs (V)**. Option 1 is better for finding your true breakeven.
If you offer “free shipping,” the shipping cost is part of your **Variable Cost (V)**. If you charge the customer for shipping *separately*, you can often ignore both the shipping revenue and shipping cost, as they cancel each other out (unless you make a profit on shipping).
Flat *monthly* fees (like a Shopify plan) are a **Fixed Cost (F)**. Fees charged *per-transaction* (like listing fees, transaction fees, or payment processing fees) are a **Variable Cost (V)**.
Enter your (F) (e.g., $300), (V) (e.g., $15), and your target number of sales (Q) (e.g., 20 items/mo). Solve for (P): `P = ($300 / 20) + $15 = $15 + $15 = $30`. This means your average item price must be at least $30 to break even if you sell 20 items per month.