06 Jun

Find Your Break-Even Point

Do you know your break-even point? How much do you have to sell each month to cover all the fixed expenses in your business? This is an important concept I learned from Robyn Johnson’s Unstoppable Academy. Here’s how I calculated mine:

  1. First, I made a list of all our monthly expenses associated with the business. This includes subscriptions : Amazon pro account, InventoryLab, paid groups and apps, business insurance, and other recurring expenses. Spend some time on this, and come back to it again later. You might be surprised at what you forgot the first time.
  2. I also included our own paycheck, our VA, and the amount we pay our daughters IF we have agreed to give them a minimum amount of hours.
    Each of these is a fixed cost with little or no variation from month to month. It’s important to include your own pay, because your time is not free, and it’s not unlimited. If your business is built around the assumption that your time is free and unlimited, you cannot expand beyond your own personal ability to work, and you become a slave to your business – an unpaid worker who cannot leave.

The total is our monthly fixed expenses. Let’s just call it Fixed.

  1. Then I used InventoryLab to find our average profit/item (go to FBA Sales and look at the bottom right). I subtracted our per-item expenses: $1.25 for sourcing, and $1.25 for prep/ship because these costs are added to nearly every item we source. This gives a better picture of our profit/item. We’ll call this Profit.
  2. Fixed ÷ Profit tells me that we need to sell XXX items/month to break even.
  3. I multiplied the number of items we need to sell by our ASP (Average Selling Price – find it in Seller Central: Reports: Business Reports) and learned that we need to sell $XX,XXX/month to break even.

So the formula is (Fixed ÷ Profit) x ASP = Break Even Point

This is how much we need to sell each month (gross sales) in order to cover our basic business expenses. This number doesn’t tell the whole story – it won’t let us expand our business, and if we didn’t spend enough on new inventory our sales would quickly drop off a cliff. But this is a good starting point for understanding how our expenses affect the health of our business.



  1. Don
    June 6, 2017

    Good stuff! I thought you can put all expenses in Inventory Lab?

    • Kim Coghlan
      June 6, 2017

      We can and do record all expenses in Inventory Lab, but the point here is to take a look at the fixed ones vs. those that fluctuate based on activity or come and go irregularly. Also, we sometimes forget to enter an expense. This exercise helps us to find, consider, and enter them – or kill them.

  2. June 7, 2017

    Thanks for sharing. I did this when I first started so I would know when I was actually making money. Now I need to revisit as fixed expenses have grown.

  3. March 31, 2024

    Hey there I am so happy I found your weblog, I really found you
    by mistake, while I was searching on Bing for something else, Nonetheless I am here now and would just like to say many thanks for a incredible post and a all round thrilling blog (I
    also love the theme/design), I don’t have time to look over it all at the moment but I have bookmarked it and also added in your RSS feeds,
    so when I have time I will be back to read more, Please do keep up the excellent b.

    Also visit my homepage; vpn special coupon code 2024

  4. March 31, 2024

    It’s very easy to find out any topic on web as compared
    to textbooks, as I found this post at this web site.

    Check out my site: vpn special coupon code 2024

  5. April 1, 2024

    Hello, i think that i saw you visited my website so i came
    to go back the want?.I am trying to find issues to improve my web site!I assume its good enough
    to use some of your ideas!!

    Also visit my webpage; vpn special code

  6. April 6, 2024

    Hi to every one, the contents existing at this website are genuinely remarkable for people experience, well, keep up the nice
    work fellows.

    my homepage … vpn code 2024

  7. April 8, 2024

    Hi there! I could have sworn I’ve been to this blog before but after
    checking through some of the post I realized it’s new to me.
    Nonetheless, I’m definitely glad I found it and I’ll be bookmarking and checking back

    Also visit my web blog … vpn special code

  8. April 10, 2024

    Hey there! This is kind of off topic but I
    need some advice from an established blog. Is it
    very hard to set up your own blog? I’m not very techincal but I can figure things out pretty quick.
    I’m thinking about setting up my own but I’m not sure where to begin. Do you have
    any ideas or suggestions? Appreciate it

    Also visit my blog :: vpn coupon code 2024


Leave A Reply

Your email address will not be published. Required fields are marked *