Break-Even Price: The Lowest Price You Can Sell At Without a Loss

January 5, 2026 · Updated: August 2, 2026 · KârHesapla · Ferhat Demir · E-commerce Specialist

Short answer: The break-even price is the sale price at which you make neither a profit nor a loss on a product. Because commission and VAT depend on the price itself, it cannot be found by adding a percentage on top of the cost; instead, the cost is divided by a denominator. Formula: Total VAT-exclusive cost / (1 − commission rate − VAT share). The VAT share is separated out from within the VAT-inclusive price with VAT / (100 + VAT).

Who does this calculation apply to?

The calculation below represents the standard case of a business that sells on a marketplace and is registered for Turkish VAT (KDV):

• Costs and expenses are entered excluding VAT. Since you can deduct the VAT on your purchase invoice, the real cost of the product is the net amount.
• The sale price includes VAT. The list price you enter on the marketplace is the total amount the buyer pays.
• Commission is deducted from the VAT-inclusive sale price.

For businesses that cannot deduct VAT or have a special tax situation, the result will differ. If that applies to you, clarify the cost side with your accountant.

What is the break-even price?

You sell a product for 300 TL and it costs you 180 TL. The 120 TL difference looks like profit. Yet VAT comes out of that 300 TL, commission is deducted on top, and shipping has to be paid. Setting a price without seeing what remains produces a loss that grows as your sales volume grows.

The break-even price answers this question: it is the price at which net profit is exactly zero after all deductions. Every sale below this price is a loss; every cent above it goes straight to profit.

The tricky part is that commission and VAT are not fixed amounts but percentages of the sale price. When you change the price, the deductions change too. That is why "cost + the profit I want" does not work; the equation has to be solved for the price.

Break-even price and break-even point are not the same thing

The two terms are constantly used interchangeably, yet they answer different questions.

This article covers the first one: the floor price per product. The number of sales at which you cover your rent, staff and subscriptions is a separate calculation, and that calculation uses the profit per product, not the break-even price described here.

The variables in the formula

Break-even price = Total VAT-exclusive cost / (1 − commission rate − VAT share)

As the denominator approaches zero, the price grows rapidly. If commission and the VAT share add up to 1, there is no valid break-even price: with that deduction structure, the product does not become profitable at any price.

How do you separate VAT from a VAT-inclusive price?

This is where the most common mistake happens. For a product with 20% VAT, 20% of the VAT-inclusive price is not VAT, because the 20% is added on top of the VAT-exclusive amount.

Take goods worth 100 TL. 20% VAT is added on top and the sale price becomes 120 TL. The VAT contained in that 120 TL is 20 TL — that is not 20% of the price but 16.67%. The correct share:

VAT share = VAT / (100 + VAT) = 20 / 120 = 0.166667

Skipping this distinction and using 0.20 directly shrinks the denominator and shows the break-even price higher than it really is. At 20% VAT the difference is 3.33 points; it may look small on a single product, but across hundreds of products it pushes your prices above your competitors'. If you need to switch between VAT-inclusive and VAT-exclusive amounts, you can use the VAT Calculator; for more detail, see the article on VAT-inclusive and VAT-exclusive price calculation.

Example 1: Selling without commission

You sell from your own website, so there is no commission. Product cost is 150 TL (excluding VAT) and the VAT rate is 20%.

Let's check: the VAT contained in 180 TL is 180 × 0.166667 = 30.00 TL. That leaves 150 TL, which is the entire cost. Net profit is zero.

Example 2: Selling on a marketplace with commission

You sell the same product on a marketplace that charges 15% commission.

Let's verify the result in reverse. Deducting all costs from the break-even price should leave zero:

Since the remainder is zero, 219.51 TL really is the break-even price. If you want to try it with your own category's commission rate, you can start from the Trendyol commission calculator page; the rate differs in every category, and the value shown in your seller panel is binding.

Example 3: Including shipping, packaging and advertising

In a real sale, cost is not a single item. For the same product:

The denominator does not change (1 − 0.15 − 0.166667 = 0.683333); only the numerator grows:

215 / 0.683333 = 314.63 TL

Reverse check: 314.63 × 0.166667 = 52.44 TL VAT, 314.63 × 0.15 = 47.20 TL commission. 314.63 − 52.44 − 47.20 − 215.00 = 0.00 TL.

When the product cost rose from 150 TL to 215 TL, the floor price climbed from 219.51 TL to 314.63 TL. The 95 TL difference does not come only from the 65 TL increase in expenses; because those expenses are also loaded onto the price together with commission and VAT, the effect multiplies. For a good checklist of the items that are easy to miss, see the article on hidden e-commerce costs.

Separating fixed and variable costs

Only the expenses that arise together with the sale of that product go into the product-level break-even price. The distinction:

Fixed costs are not spread over the product price; how many sales it takes to cover them is calculated separately. Adding fixed costs to the product cost inflates the break-even price and needlessly leaves you unable to lower your price in campaigns.

The return rate is the borderline item. If a certain percentage of your product comes back, its cost needs to be spread across each sale; for the calculation method, see the article on calculating the cost of returns (in Turkish).

How does the price change when you add a target margin?

The break-even price is the lower limit, not the target. If you want a specific net profit margin, you also subtract the margin in the denominator:

Price = Total VAT-exclusive cost / (1 − commission rate − VAT share − target margin)

With 215 TL cost, 15% commission and 20% VAT:

Note that as the margin rises, the price climbs not linearly but at an accelerating pace: going from 0% to 10% adds 53.94 TL, while going from 20% to 30% adds 116.04 TL. As the denominator shrinks, each additional margin point becomes more expensive. If you want to set a realistic margin range for your category, the profit margin calculator shows the scenarios side by side.

The margin here is the net profit margin relative to the VAT-inclusive sale price. Confusing it with markup on cost skews the result seriously: at a price of 314.63 TL, a 215 TL cost means a 0% margin relative to the sale price, but looked at relative to cost, a different picture emerges.

Setting a campaign floor price

Marketplaces regularly send discount invitations. When you evaluate them, your only reference should be the break-even price.

For the product with a 215 TL cost, the floor is 314.63 TL. If the marketplace suggests a 25% discount and your normal price is 420 TL, the discounted price becomes 315 TL — just 0.37 TL above break-even. Technically this campaign does not cause a loss, but in practice it does: returns, damage, customer service and the cost of tied-up cash are well above that difference.

Practical rule: keep your campaign floor price 8–10% above break-even. This range leaves a safety margin for small items that do not make it into the calculation. To see whether a campaign is really profitable once the sales uplift is taken into account, you can use the approach in the article on campaign profitability analysis (in Turkish).

Break-even price in Excel

Enter the cost, commission and VAT rate in cells:

Break-even price formula:

=B2/(1-B3-B4/(1+B4))

For 150 TL cost, 15% commission and 20% VAT, this formula returns 219.51 TL — exactly the same result as the second example above and the calculator on the site. If you want to add a target margin, enter the margin in B5 and add it to the denominator:

=B2/(1-B3-B4/(1+B4)-B5)

The critical part of the formula is B4/(1+B4). If you enter B4 directly, you calculate VAT from the outside and the result comes out wrong.

About rounding

Calculations are done at full precision, and the result is rounded to two decimal places when it is displayed. That is why you may see a difference of a few kuruş when you recalculate intermediate values by hand. For example, 219.51 TL is actually 219.5122 TL. Calculating everything in a single formula, instead of rounding intermediate steps and carrying on, eliminates this difference.

Common mistakes

• Calculating VAT from the outside. Use 0.166667 in the denominator instead of 0.20. This is the most common and the most expensive mistake.
• Entering cost including VAT. If you enter the total of the purchase invoice, you count the VAT you can deduct as a cost. The floor price comes out higher than it really is.
• Calculating commission on the VAT-exclusive price. Marketplace commission is deducted from the total amount the buyer pays.
• Using an average for shipping. For products with large desi (volumetric weight) differences, an average shipping cost overstates profit on low-desi products and creates hidden losses on high-desi ones.
• Ignoring returns. In categories with high return rates, this item can be larger than the commission.
• Mistaking break-even for the target. The break-even price is not the price to sell at; it is the limit you should not go below.

Frequently asked questions

Is the break-even price the same as cost?

No. Cost is what the product costs you; the break-even price is the sale price that exactly covers that cost after commission and VAT are deducted. For a product costing 150 TL, the break-even price with 15% commission and 20% VAT is 219.51 TL.

Why can't I just add a percentage on top of the cost?

Because commission and VAT are percentages of the sale price, not of the cost. When you raise the price, the deductions rise too. That is why the equation is solved not by multiplying but by dividing by the denominator.

What changes if my VAT rate is 10%?

Only the VAT share: 10 / 110 = 0.090909. With 15% commission the denominator becomes 0.759091, and for a 150 TL cost the break-even price drops to 197.60 TL. A lower VAT rate pulls the floor price down directly.

If the buyer pays for shipping, should I include it in the cost?

If the buyer pays the shipping fee separately and that amount is passed on to you, do not include it in the cost. If you offer free shipping or have built it into the price, always include it — this is the most common source of hidden losses.

Does it ever make sense to go below the break-even price?

In limited cases: clearing stock, end-of-season clearance or collecting the first reviews for a new product. These are deliberate, time-limited decisions. It is not sustainable as a permanent pricing strategy.

Should I calculate it separately for each product?

Yes. The commission rate varies by category, the shipping fee by desi, and the VAT rate by product group. Two products bought from the same supplier can have different break-even prices.

Summary

The break-even price is the foundation of your pricing decisions. It is the first number to look at when you evaluate a campaign, when a competitor cuts prices or when a marketplace sends a discount invitation. Calculate it once for each product, note it on the product card and update it whenever your costs change.

You can verify all the examples in this article with the calculators on the site; the formulas are exactly the same.