How many units must a China product range sell?
Divide launch and other fixed costs by contribution per unit, or by weighted contribution for the expected sales mix, then round upwards. Contribution is net selling revenue less variable costs. Only sold units contribute; unsold stock ties up cash. Prepare the factory cost inputs with Cambridge China Bridge.
Set the recovery target before calculating units
Choose the period in which the range should recover its launch costs. List development, sample revisions, tooling, launch photography and other spending that does not change with units sold within that period. Add the fixed running costs you want the range to cover. This is a management calculation, not a decision about how those costs appear in statutory accounts. For testing expenditure, see safety testing costs for small ranges.
Use the hidden import costs guide to check the spending list. For this calculation, separate development and tooling from variable product costs. If your landed quotation already spreads tooling across units, remove that allocation before also including the tooling in fixed costs. Otherwise you count it twice.
Build contribution for each product
For each product, subtract variable costs from net selling revenue after discounts and expected refunds. Include the goods cost, attributable freight and duty, sales commissions, payment fees, packing and delivery costs that vary with sales. Allow for returns, replacements and defects without counting their costs again elsewhere. Use freight allocation guidance where products share a shipment.
Exclude sales VAT from revenue where applicable. Keep VAT you can recover out of costs and include any irrecoverable amount; check your treatment through the import VAT guide. If a purchase has personal use as well as business use, only its business proportion of VAT can be reclaimed. Fixed campaign spending belongs in fixed costs; advertising that varies with orders belongs in variable costs.
Calculate the required sales
For a single product with positive contribution, divide the fixed recovery target by contribution per unit and round upwards to whole saleable units. For a range, multiply each product's contribution by its expected share of units sold, then add the results. Divide the fixed recovery target by that weighted contribution. Use unit shares here, rather than shares of sales revenue.
Translate the result into whole units of each product and check it again: multiply each product's proposed sold quantity by its contribution, then add those amounts. The total must cover the fixed target. Compare the required sales with available saleable stock and demand evidence. If weighted contribution is zero or negative, increasing volume at that mix cannot recover positive fixed costs.
Test mixes that buyers might actually purchase
Create separate forecast rows for your expected mix, a mix favouring lower-contribution products and a mix requiring discounts to clear slower lines. Enter each product's sold quantity, net selling revenue and variable cost in each scenario. Calculate total contribution and subtract the fixed recovery target to show the surplus or shortfall.
Keep unsold quantities visible beside sold quantities. Limit high-contribution sales to credible demand and available stock. Recalculate prices, freight and fixed costs when a scenario changes the order size, shipment plan or development scope. Do not use the factory order mix as the sales mix unless you have evidence that customers will buy it that way.
Separate launch recovery from cash recovery
Purchased stock is not sales revenue. Unsold stock contributes nothing to this sales calculation, even if it remains saleable. Show its purchase cash separately, alongside storage, financing and any expected disposal loss. For accounting treatment, use the unsold stock valuation guide; do not add its carrying value to sales contribution.
Build a separate cash schedule covering development payments, deposits, balances, freight, taxes and customer receipts. A range can cover its fixed target through sales contribution while cash remains tied up in stock or unpaid customer invoices. Use the working capital guide, then ask Cambridge China Bridge's China staff to confirm factory costs, tooling charges and packing assumptions before committing.
Frequently asked questions
Do development costs belong in break-even?
Include them in the fixed target when measuring full launch recovery. Keep them out of variable unit costs if already included there. A decision about further spending should also show remaining costs separately.
Can I count unsold stock towards break-even?
No. Unsold stock generates no sales contribution. Show its cash commitment separately and use realistic sold quantities, discounts and disposal assumptions.
How do I calculate break-even for several products?
Weight each product's unit contribution by its share of units sold. Divide fixed costs by the combined contribution, round upwards and check the actual whole-unit quantities cover the target.
What if my cheapest product sells fastest?
Recalculate using that sales mix. Selling price alone does not tell you contribution. If the faster-selling product contributes less per unit, the range needs more sales to cover the same fixed target.