Below it the business loses money each month; above it, every extra order’s contribution is profit. It falls when contribution per order rises or fixed costs fall, which is why small margin gains matter so much for young brands.
Express it in orders a month as well as revenue: it makes the target concrete for the whole team.
Formula
Break-even orders = Fixed costs ÷ Contribution after marketing per order
Example
Fixed costs of ₹5,00,000 a month and ₹250 of contribution after marketing per order break even at 2,000 orders a month.
CM1, CM2, CM3 and EBITDA per order and per month, with RTO, COD, channel comparison and a board-ready report.
Related terms
- Fixed and variable costsVariable costs rise with every order, such as product cost, shipping and fees…
- Contribution margin (CM1, CM2, CM3)Contribution margin is the revenue left from a sale after the variable costs of…
- Unit economicsUnit economics describes the revenue and costs of a single unit of a business…
Part of the growth marketing glossary by Shiva Sharma.