Break-Even Price on Daraz: How to Work It Out

The break-even price is the lowest price at which a sale makes zero profit. At that price you are paid back for the product, packing, every Daraz fee and the tax lines, and nothing more. Price below it and each sale loses money.

How Do I Find It?

Split your costs into two groups. Per-order amounts that do not depend on price (product cost, packing, a fixed per-item fee, net shipping) are the fixed part. Fees that are a percentage of the price (commission with VAT, payment fee, the two tax lines) are the percentage part. Then:

break-even price = fixed costs divided by (1 minus percentage part)

Worked Example

Example: Store A has fixed costs of Rs 450 per order (made up). The percentage part is commission 10 percent plus 15 percent VAT on it (11.5), payment fee 2.5875, and observed tax lines of about 1.95 and 1.6 percent, a total of about 17.64 percent.

Break-even = 450 divided by (1 minus 0.1764) = 450 divided by 0.8236, about Rs 546.

Selling at Rs 546 earns nothing. Selling at Rs 700 leaves roughly Rs 700 times 0.8236 minus 450, about Rs 126 of profit.

Common Mistakes

• Treating commission as the only percentage.
• Forgetting returns and cancelled orders when judging a "safe" price.
• Using the break-even as the selling price.

Related Terms

Profit margin, markup, payment fee. The selling price calculator finds it for you, and the profit calculator checks it.