Calculate profit, loss, margin, markup and break-even point with multi-currency support
Understanding profit, margin and markup is essential for any business. These three concepts sound similar but measure different things and are used for different purposes.
A 40% markup does NOT equal a 40% margin. At 40% markup: cost = $60, selling price = $84, profit = $24, margin = 24/84 = 28.6%. Many business owners make pricing errors by confusing these two. Use margin when evaluating profitability from a revenue perspective. Use markup when calculating selling price from cost.
Retail: 2–5% net margin (thin margins, high volume). Software: 70–90% gross margin. Restaurants: 3–9% net margin. Manufacturing: 5–10% net margin. Consulting/Services: 20–40% net margin. Compare your margin to industry benchmarks rather than using a single universal standard.
Profit, margin, markup and break-even are four essential business metrics. They sound similar but measure different things and serve different purposes. Understanding the distinction is critical — many small businesses make pricing errors by confusing margin and markup, which can severely undercut profitability.
Profit amount = Selling Price − Cost Price. This is the absolute dollar profit per unit. Profit margin = (Profit ÷ Selling Price) × 100. This is profit as a percentage of revenue — what accountants and investors use to evaluate businesses. Markup = (Profit ÷ Cost Price) × 100. This is profit as a percentage of cost — what businesses use to set prices from cost.
A 40% markup does NOT equal a 40% margin. If you mark up a $60 cost item by 40%, the selling price is $84 and the margin is 24/84 = 28.6% — not 40%. Always clarify which measure is being used in any business conversation to avoid costly pricing mistakes.
Margins vary enormously by industry. Software and SaaS companies achieve gross margins of 70–90% because their cost to serve each additional customer is near zero. Retail operates on 2–5% net margin with high volume. Restaurants average 3–9% net margin. Manufacturing runs 5–10%. Professional services (law, consulting, accounting) achieve 20–40%. Use the percentage calculator to compare margins across periods or businesses.
Break-even is where total revenue equals total costs — no profit or loss. Break-Even Units = Fixed Costs ÷ Contribution Margin per unit, where Contribution Margin = Selling Price − Variable Cost. If your fixed costs are $10,000/month, you sell at $25/unit, and variable costs are $15/unit, your contribution margin is $10/unit and break-even is 1,000 units. Selling unit 1,001 starts generating profit. Use the Break Even tab to model your specific business.
Start with the Markup tab: enter your cost and desired markup percentage to get the correct selling price. Then verify in the Margin tab that your gross margin meets your business targets. Finally, use Break Even to confirm you can realistically reach the unit volume needed for profitability at that price. This three-step process is the foundation of sound pricing strategy for any product-based business.