Break Even, Markup and Profit Margin Calculator

The formula

• Profit Margin % = (Revenue − Cost) ÷ Revenue × 100
• Markup % = (Revenue − Cost) ÷ Cost × 100
• Profit = Revenue − Cost
• Sale Price from markup = Cost × (1 + Markup ÷ 100)
• Sale Price from margin = Cost ÷ (1 − Margin ÷ 100)

A worked example

A seller buys a handmade candle for $40 and lists it at $65. Subtracting cost from price gives a profit of $25. Dividing that $25 by the $65 selling price yields a profit margin of 38.46%, about 38 cents of every revenue dollar is kept as profit. Dividing the same $25 by the $40 cost gives a markup of 62.5%, which is the figure the seller would quote a supplier. Same sale, two correct percentages. This is exactly why the calculator shows both side by side.

More about the Profit Margin Calculator

Know your three core numbers

Cost is everything you pay to deliver one unit, materials, shipping, packaging, fees, the lot.

Revenue is what the customer actually pays, after discounts.

Profit is revenue minus cost, the one number both margin and markup are built from.

Margin vs markup: learn the difference once

Margin divides profit by selling price; markup divides profit by cost.

A 50% markup is only a 33.3% margin, mix them up and you underprice yourself.

Suppliers talk markup; accountants and investors talk margin.

Three ways to use this calculator

Cost + price: check the margin on something you already sell.

Cost + target margin: set the price for a new product.

Cost + desired profit: work backwards to the selling price you need.

Price from a target margin

Use price = cost ÷ (1 − margin ÷ 100), never just add the margin percent to cost.

Example: a $40 cost at 40% margin has to sell for $66.67.

Round to something friendly like $66.99, then re check the margin still holds.

Pricing mistakes that quietly eat profit

Forgetting marketplace fees and shipping when you total up cost.

Discounting without re running margin, 20% off can nearly halve it.

One blanket margin for every product, no matter how much effort each one takes.

Estimate only: know the limits

Taxes, returns, and overhead aren't included unless you fold them into your cost.

Treat results as a pricing guide, not financial or accounting advice.

For tax or legal decisions, talk to a qualified accountant.

A full worked example: the $28 product that sells for $45

Suppose a product costs you $28 all in, the item itself, its packaging and the shipping you pay to receive stock, and you sell it for $45. Your profit is $45 minus $28, which is $17. Your margin is that $17 divided by the $45 selling price, which comes to 37.78 percent. Your markup is the same $17 divided by the $28 cost, which comes to 60.71 percent. One sale, one profit, two percentages, and the calculator shows both so you always know which one a supplier, marketplace or business partner is quoting you.

Now price the same product backwards from a target. If you want a 50 percent margin on a $28 cost, dividing by two will not get you there, and adding 50 percent to cost gives $42, a price whose real margin is only 33.3 percent, because $14 of profit on a $42 price is a third, not a half. The correct route is the formula in the existing guide: $28 divided by one minus 0.50, which is $56. At $56 the profit is $28, and $28 is exactly half the price. That $14 gap between the wrong method and the right one is pure margin surrendered by a maths shortcut.

Sanity check any result with the relationship between the two percentages: margin is always the smaller number, and each converts into the other. A 60.71 percent markup becomes a margin by dividing 60.71 by 160.71, which returns 37.78 percent. If a tool or a partner ever shows you a margin larger than the markup on the same transaction, something in the inputs is wrong, usually a cost that quietly excluded fees or shipping.

Break even: turning margin into a unit target

Margin tells you what each sale contributes; break even tells you how many contributions you need. Suppose your fixed monthly costs, rent, software, insurance, the bills that arrive whether you sell anything or not, total $2,000, and each sale of your $45 product contributes $17 after its own costs. Dividing $2,000 by $17 gives 117.6, so you must sell 118 units a month before the business earns its first dollar of true profit. Every unit after the 118th contributes its full $17.

The discipline is in what you count as the $17. Contribution means price minus every cost that scales with the sale: the product, packaging, transaction fees, shipping subsidies, the lot. If a $2 fee was left out, the real contribution is $15, the true break even is 134 units, and a month that felt safely profitable at 125 units was actually a loss. Rebuild the cost figure honestly, rerun the calculator, and let the unit target it produces set your sales goal, not optimism.

Break even also prices your experiments. If a new product contributes $9 a unit against the same $2,000 of fixed costs, it needs 223 monthly sales to carry the same weight as 118 sales of the $17 product. That comparison, contribution per unit against a shared fixed cost bar, is how you decide which product deserves the homepage, the ad budget and your limited hours, instead of whichever one merely has the prettiest margin percentage.

What a discount really does to the same product

Take the $28 cost and $45 price from the worked example and run a 15 percent off promotion. The sale price becomes $38.25, the profit falls from $17 to $10.25, and the margin drops from 37.78 percent to 26.8 percent. A 15 percent price cut erased nearly 30 percent of your margin, because the discount came entirely out of the profit layer while the $28 cost stood untouched. This asymmetry is the single most underappreciated fact in small business pricing, and the calculator makes it visible in ten seconds.

The recovery maths is just as sobering. At $10.25 profit per unit instead of $17, you must sell about 1.66 units to earn what one full price unit earned, roughly 66 percent more sales, merely to stand still on total profit. Promotions can absolutely be worth it for clearing stock, winning new customers or lifting basket size, but “worth it” should be a conclusion you reach after that calculation, not a hope you bring to it. Run the discounted price through the calculator before the sale launches, while the decision is still free.

Margin across a product range, not just a product

Single product margins mislead when your range mixes profiles. Suppose you sell two items: one contributes $17 of profit on a $45 price, the other contributes $4 on a $20 price. The second shows the healthier looking percentage story is false, its margin is 20 percent against the first item’s 37.78 percent, but the real question is volume weighted: if the $4 item outsells the other five to one, the pair together earn $37 of profit on $145 of revenue in a typical six sale bundle, a blended margin of about 25.5 percent.

That blended figure is the one your bank account experiences. Review it monthly alongside the individual margins: a range can look healthy product by product while slow drift toward the low margin bestseller quietly thins the whole business. The calculator’s role in that review is speed, each product takes seconds to re run when a supplier price moves, so the blended picture is never more than a few honest minutes out of date.

How to use the Profit Margin Calculator

1. Choose what to find: margin and markup, or the selling price for a target margin or markup.
2. Enter your cost, plus the selling price, or your target percentage.
3. Hit Calculate to see profit, profit margin, and markup instantly.
4. Fold shipping, fees, and taxes into your cost first for your real margin.