Calculating the break-even price for ebay products

by Ecommerce success

Pricing products for sale is not easy, and it can get complicated when you have to consider all the added fees that comes with selling on platforms such as ebay. A good starting point is to work out the break even price.

The break even price is the minimum or the cheapest price you can sell an item for, where you make no profit or a loss. It is the cheapest you can afford to sell it without hurting your financials.

Formula to calculate break-even price:

The way we use this is as follows:

  • Take the SUM of the item actual cost, the actual shipping cost and the fixed order fee for ebay (e.g. $0.30)
  • Subtract from 1 the ebay fee rate, the sponsored fee rate (if used) and any tax rate as a decimal
  • Divide the first number by the second number for the break even price

Example to calculate the break even price:

Lets take an example to show how we work it out – we’re selling a t-shirt with the following details:

  • T-shirt actual cost is $19.95
  • It cost us $9.95 to ship anywhere in the country
  • Ebay charges us $0.30 for each order placed
  • The clothing category charges us 10.40% commission on ebay
  • There is a 5% sponsored fee rate in ebay applied on the item
  • The tax rate in the country is 10%

Crunching the numbers, you end up with a break-even price of $40.48 for our t-shirt on the ebay platform.

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