Profit Margin Calculator

What the profit margin calculator does

This calculator turns four numbers you already know into the figures that actually decide whether a product or service makes money. Give it the cost per unit, the selling price, how many units you sell in a typical month and your fixed monthly costs such as rent, salaries, software and hosting. It instantly shows gross margin, markup on cost, profit per unit, monthly gross profit, the break-even number of units and your net monthly profit after fixed costs.

Margin and markup are often confused, and the mix-up is expensive. Margin is profit as a share of the selling price. Markup is profit as a share of cost. A 50 percent markup is only a 33 percent margin, so a business that sets prices by markup but reports by margin will quietly overestimate how healthy it is. The calculator shows both so you never have to convert in your head.

How to use it

1. Enter what one unit costs you to make, buy or deliver, including packaging and payment fees if you know them.
2. Enter the price the customer pays for that unit.
3. Add the number of units you sell in an average month.
4. Add your fixed monthly overhead, then read the results and the plain-language note beneath them.

Try nudging the price up or down a few dollars and watch the break-even volume change. For most small businesses, a small price increase moves the bottom line far more than selling a few extra units.

Why it matters

Break-even is the single most useful number here. It tells you how many sales you need each month just to cover overhead, and everything above that is real profit. If your current volume sits below break-even, you know exactly how many more sales you need or how much cost you must remove. If you are comfortably above it, you can see how much room you have for discounts, a marketing budget or a new hire.

Once you understand your margins, the next question is usually how much of each sale you keep after payment processing and platform fees. Our ecommerce fee calculator breaks that down per order, and the website ROI calculator helps you judge whether an investment in a new site or store pays for itself.

• See margin and markup side by side and stop confusing the two.
• Know the exact monthly volume you need to break even.
• Test price changes before you announce them.