How to calculate your break-even conversion rate
Your store breaks even when the money left from your orders pays for your ads and your fixed costs, and nothing more. Turn that into a conversion rate and you get:
Break-even conversion rate = (ad spend + other costs) ÷ (visitors × average order value × margin)
The example the calculator opens with: a store with 13,000 visitors a month (about 3,000 a week), a $120 average order and a 55% margin before ads, spending $5,000 on ads and $1,000 on everything else.
| Costs to cover each month | $5,000 + $1,000 | $6,000 |
| What one order leaves you | $120 × 55% | $66 |
| Orders needed to break even | $6,000 ÷ $66 | 91 orders |
| Break-even conversion rate | 91 ÷ 13,000 | 0.70% |
The store converts at 0.5%, so it loses money. But it doesn't need to double its conversion rate. It needs about 40% more, from 0.5% to 0.7%.
A low conversion rate can still be profitable
The average Shopify store converts at about 1.4%. That doesn't mean a store at 0.5% is broken. A high-ticket store selling $1,500 orders with a healthy margin can be profitable at 0.2%, while a store selling $25 products can lose money at 2%. That's why the number to compare yourself with is your own break-even, not an industry average.
And once you're above break-even, conversion rate stops being the goal. Revenue per visitor is. A price test that lowers your conversion rate but raises the order value can still make you more money.
How to close the gap
Don't redesign the store. Find the leak first:
- Split your conversion rate by traffic source. Often one channel, usually a cold paid one, pulls the whole average down. Then it's an ad problem, not a website problem.
- Compare your funnel with what's normal. About 6% of visitors add to cart, and about 3 in 10 carts become orders. The step where you're furthest below is the one to fix first.
- A/B test the fix and stack the wins. Wins multiply: three tests that win 27.5%, 10% and 8% add up to about 51% more revenue from the same visitors. Ten wins of 5% each add more than 60%.
Want every line of your P&L, including returns, discounts, fees and tax? Use the full Shopify profit calculator. For ideas to test, read 100 ways to improve conversion rate on Shopify.