Profit Margin & Break-even Calculator
Enter your costs and prices to see your profit margin, markup and the price you need. Switch to break-even to find how many sales cover your fixed costs. Everything runs in your browser.
What do you know?
Result
Pricing table for this cost
The selling price you need at different margins, based on the cost above.
| Margin | Selling price | Profit per unit | Markup |
|---|
Your numbers
Break-even result
Margin and markup are not the same
Margin is the share of the selling price that is profit. Markup is the profit as a share of what the item cost you. If something costs 60 and sells for 100, the profit is 40, the margin is 40% and the markup is about 66.7%. Many pricing mistakes come from setting a 40% markup and expecting a 40% margin, which would leave you with less profit than planned.
The formulas
- Profit = selling price minus cost
- Margin = profit divided by selling price
- Markup = profit divided by cost
- Price from a target margin = cost divided by (1 minus margin)
- Price from a target markup = cost multiplied by (1 plus markup)
How break-even works
Your fixed costs stay the same however much you sell, while your variable costs rise with every sale. Each sale contributes its price minus its variable cost toward paying the fixed costs. The break-even point is your fixed costs divided by that contribution. Sell fewer units and you lose money, sell more and the extra contribution becomes profit.
Using the results
- Include every per-sale cost in the variable cost: materials, delivery, payment fees and commissions.
- Put costs that do not change with sales, such as rent, salaries and software, in the fixed costs.
- If your break-even number looks unrealistic, test a higher price, a lower variable cost or lower fixed costs.
- Use the target profit box to find how many sales you need to reach a specific profit.
A good margin depends on your industry, so compare your numbers with businesses like yours instead of a single universal figure. The calculator uses only the numbers you enter and does not include tax.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A product that costs 60 and sells for 100 has a 40% margin and a 66.7% markup. Mixing them up is a common pricing mistake.
What are the formulas?
Profit = price minus cost. Margin = profit divided by price. Markup = profit divided by cost. To set a price from a target margin, divide the cost by one minus the margin. To set it from a markup, multiply the cost by one plus the markup.
What is a break-even point?
It is the number of units you must sell so that your total sales cover your total costs. Below it you make a loss, and above it you make a profit.
What is contribution margin?
It is the amount each sale contributes toward paying your fixed costs, which is the selling price minus the variable cost per unit. Break-even units equal fixed costs divided by this amount.
Does the calculator include tax or overheads?
No. It uses only the numbers you enter. Add tax, delivery, payment fees and other per-sale costs to the variable cost, and your rent, salaries and software to the fixed costs.
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