Break Even Calculator for Clothing: The Short Answer
A new brand pays £2,000 a month in fixed costs for software, a studio desk and marketing. It sells a hoodie for £40 before VAT. Each hoodie costs £12.50 landed, £4.00 to pick, pack and post, and about £1.20 in payment fees, which leaves a contribution of £22.30. Dividing the fixed costs by the contribution gives 89.7, so the brand must sell 90 hoodies a month to break even, which is £3,600 of revenue. This break even calculator for clothing does that sum for any set of figures, and it shows what happens above and below that volume.
The figures are placeholders chosen to show the method. A break even calculator for clothing is only as good as the costs you put in, so start with a landed cost you trust, built with the garment costing calculator, rather than the factory price alone.
Use the Break Even Calculator for Clothing
Enter the fixed costs you pay each month whether or not you sell anything, the selling price before VAT, the landed cost of one unit and any other variable costs such as packing and postage. Add the payment fee percentage, the units you expect to sell and the launch investment you want to recover. The break even calculator for clothing returns break-even units and revenue, the contribution per unit, the profit at your expected volume and the months to payback.
Break even calculator for clothing
Break-even units and payback
A simple model with one product price and steady monthly sales. Figures are placeholders; fees, returns and discounts change the result, so test them separately.
Treat the output of the break even calculator for clothing as a floor, not a target. Break-even means you cover costs, with nothing left over for growth, tax or the next collection. The margin of safety row shows how far your expected sales sit above that floor, and a wide margin is what makes a launch survivable when a month goes badly.
The Break-Even Formula Explained
Break-even is where total revenue equals total cost. Each unit contributes its price minus its variable costs, and that contribution first pays the fixed costs. Once the fixed costs are covered, every further unit adds to profit. The formula is fixed costs divided by contribution per unit, rounded up to the next whole unit.
From costs to break-even units
- 1List fixed costsCosts you pay each month regardless of sales.
- 2Take the priceSelling price per unit, before VAT.
- 3Subtract variable costsLanded cost, packing, postage and payment fees.
- 4Find the contributionPrice minus all variable costs per unit.
- 5DivideFixed costs ÷ contribution = break-even units.
VAT is left out because a VAT-registered business collects it for HMRC rather than keeping it. If you are not VAT-registered, your price already includes any tax you cannot recover, and you should enter the price you keep.
Who Needs a Break-Even Calculation and When
Anyone planning a launch, a new collection or a hire can use a break-even calculation. Before a launch, it tells you what the brand must sell to pay for itself. Before a new collection, it shows how many pieces of the new line are needed to cover its development and marketing. Before a hire or a new subscription, it shows how many extra units of sales the cost will require.
It is also a good test of an idea. If the answer says you must sell 900 units a month and your best guess is 100, you have learned something cheaply. The figures to change are then price, landed cost or fixed costs, in roughly that order of power, and the calculator shows the effect of each as you try it.
How Price Changes the Break-Even Point
Price is the most powerful input, because a higher price raises the contribution on every unit. The table holds the costs at the example values and varies only the selling price. Break-even units fall quickly as the price rises.
Break-even units a month at different selling prices
| Selling price (before VAT) | Contribution per unit | Break-even units a month |
|---|---|---|
| £30 | £12.60 | 159 |
| £35 | £17.45 | 115 |
| £40 | £22.30 | 90 |
| £45 | £27.15 | 74 |
| £50 | £32.00 | 63 |
Arithmetic: fixed costs of £2,000, landed cost £12.50, other variable £4.00, payment fee 3%. Placeholder inputs, not recommendations.
Break-even units a month by selling price
Units
Arithmetic from the table above. Placeholder inputs.
A £10 price rise cuts the break-even volume from 159 to 90 units, a drop of more than 40 per cent. That is why pricing deserves as much attention as production. Test your price with the clothing profit margin calculator and the clothing markup calculator.
How Fixed Costs Change the Break-Even Point
Fixed costs move break-even in direct proportion. Doubling them doubles the units you need. The table shows four levels of monthly fixed costs against the same unit economics.
Break-even units a month at different fixed costs
| Fixed costs per month | Break-even units a month |
|---|---|
| £1,000 | 45 |
| £2,000 | 90 |
| £3,000 | 135 |
| £5,000 | 225 |
Arithmetic: fixed costs ÷ £22.30 contribution, rounded up. Placeholder inputs.
Every recurring cost you add, from a subscription to a part-time hire, raises the number of units you must sell. That is not an argument against spending, only a reason to see what each commitment adds to break-even before you make it. Small business bodies such as the Federation of Small Businesses publish guidance on running costs.
What Your Profit Looks Like Above and Below Break-Even
Below break-even each month loses money, and above it each unit adds its full contribution to profit. The table shows monthly profit at five sales volumes in the example.
Monthly profit at different sales volumes
| Units sold in the month | Monthly profit or loss |
|---|---|
| 50 | −£885 |
| 90 | £7 |
| 150 | £1,345 |
| 300 | £4,690 |
| 500 | £9,150 |
Arithmetic: units × £22.30 − £2,000. Placeholder inputs. Returns, discounts and unsold stock are not included.
At 300 units the example brand earns £4,690 a month, and the margin of safety is 70 per cent, because sales could fall by that share before the brand dropped to break-even. Our guide to the cost of starting a clothing line explains where launch investment goes.
Where a £40 Sale Goes
The pie shows how one £40 sale before VAT is divided in the example. The contribution is the slice left after the three variable costs, and it is the slice that pays fixed costs and then profit.
Where a £40 sale goes in the example, before VAT
- Landed cost (£12.50)31.2%
- Other variable cost (£4.00)10%
- Payment fee (£1.20)3%
- Contribution (£22.30)55.7%
Arithmetic: £12.50 landed + £4.00 other variable + £1.20 payment fee leaves £22.30 contribution, which is 55.8 per cent of £40. Placeholder inputs.
More than half of each sale is contribution here, which is healthy, but remember that returns and discounts shrink the slice. A discount of 20 per cent on a £40 item takes £8 straight out of the contribution. See our guide to return rate and the markdown calculator for how it happens.
Reading the Result: What to Do With the Number
A break-even figure is useful only if it changes a decision. If it is well below your realistic sales, the launch is sound and the question becomes how fast you can grow. If it is close to your realistic sales, you have little room for a bad month, and it is worth raising price, trimming fixed costs or reducing landed cost before you commit stock.
Compare the number with evidence, not hope. Past sales, pre-orders, waiting-list sign-ups and a small test run all tell you something about demand. A break-even point that is a third of the evidence is comfortable, while one that needs every optimistic assumption to hold is a warning to start smaller.
Why the Real Break-Even Is Higher
A simple model assumes every unit sells at full price and nothing is returned. Real brands sell some stock at a discount, take some returns and are left with some unsold stock, and each of those raises the volume you must sell. A useful habit is to run the break even calculator for clothing twice, once with your planned price and once with a price reduced for the discounts you expect to give.
Costs that push break-even higher
- Returns, which refund the sale and may lose the garment
- Discounts and sales events that cut the price
- Unsold stock that was bought but never earned its cost
- Marketing spend that rises to win each new customer
- Fixed costs that creep up as the brand grows
- Currency and freight changes that raise landed cost
Qualitative list. Test each with your own figures. The British Fashion Council offers support for fashion businesses.
A first run that matches realistic demand keeps unsold stock small. Our guide to testing a new style without a large order and the sell-through rate calculator help you size it.
How Ruhrose Helps You Plan a First Order
Ruhrose develops hoodies, fleece, jersey, denim and woven casualwear for UK buyers, with production in Bangladesh. We sample before bulk, explain what goes into a quote and help you think through a first run that your brand can sell through, so the numbers in a break-even calculation are ones you can rely on. Ruhrose's clothing manufacturing pages show what we make.
Before you place an order, ask yourself one question: how many units must you sell before you have paid for the month?