Verified Mathematical Model & Formulation
Break-Even Price = (Fixed Unit Costs + COGS + Shipping) / (1 - Variable Fee %) Break-Even Units = Total Fixed Costs / (Selling Price - Variable Cost per Unit)
Determines the exact price floor where net profit equals zero, protecting sellers from selling below cost after accounting for compounding percentage marketplace fees.
Configurable Parameters & Standard Units
- Product Cost (COGS) ($): (Default: 15 usd)
- Shipping & Packaging ($): (Default: 5 usd)
- Other Fixed Costs per Unit ($): (Default: 2 usd)
- Total Marketplace Fee (%): (Default: 15 percent)
- Monthly Fixed Overhead ($): (Default: 500 usd)
Standard Worked Example & Practical Verification
Scenario: Item costs $12.00 to make, $4.50 to ship, with 15% marketplace commission and $2.00 fixed ad cost.
Calculated Solution
$21.76 Minimum Break-Even Price
Practical Takeaway: Selling below $21.76 results in a net financial loss on every single order.
Frequently Asked Questions
Why does a 15% fee require dividing by 0.85?
Because the marketplace fee is taken from the final selling price, not your cost. Dividing by (1 - 0.15) correctly accounts for the fee on the expanded price.