Pricing a product comes down to three questions. What do I charge? What am I actually keeping when the sale is done? And how many do I need to sell before the month stops costing me money?
Each calculator below answers one of them. They run in your browser, they do not require anything to be installed, and the numbers you enter stay on your computer.
Markup Calculator
Start from what an item costs you and find the price to charge. Enter your cost and the markup you want, or enter cost and price to see the markup you are already running.
Margin Calculator
Start from the price and find out what you keep. Enter cost and price to see gross margin as a percentage and in dollars, so you can compare products on the same footing.
Break-Even Calculator
Find the number of units that covers your fixed costs. Add a profit target and see how many more you need to sell to hit it.
Which calculator do you need?
| What you are trying to do | The calculator to use |
|---|---|
| Set a price when you know what the item costs you | Markup calculator |
| Find out what you keep on a price you already charge | Margin calculator |
| Compare profitability across products with different costs | Margin calculator |
| Find out how many units cover your rent, payroll, and insurance | Break-even calculator |
| Test whether a discount or a price increase is worth it | Break-even calculator |
How to calculate a selling price
There are two ways to get to a price, and they start from different places.
From cost, using markup: multiply your cost by one plus the markup percentage. An item that costs you $6.00 with a 100 percent markup sells for $12.00.
From a target margin: divide your cost by one minus the margin percentage. That same $6.00 item, at a 50 percent target margin, also lands at $12.00.
Both routes reach the same price in that example, which is exactly why the two terms get confused. They will not always agree, and the gap widens fast as the numbers get bigger.
Markup and margin are not the same number
Markup measures profit against what you paid. Margin measures profit against what you charged. Since the price is always the larger of those two numbers, the margin percentage is always smaller than the markup percentage on the same sale.
On a $6.00 item sold for $12.00, you made $6.00. Against the $6.00 cost that is 100 percent markup. Against the $12.00 price it is a 50 percent margin. One sale, one profit, two very different looking percentages.
This trips up more small businesses than any other pricing mistake. If you set a 30 percent markup while telling yourself you are keeping 30 percent, you are actually keeping about 23 percent, and every forecast built on that number is wrong.
Break-even is a moving target
Break-even is the point where the money coming in covers the money going out. It depends on three things: your fixed costs, your price, and your cost per unit. Change any one of them and the break-even point moves.
That is what makes the calculator worth running before a decision rather than after one. A discount that looks small can add a surprising number of units to what you have to sell. A rent increase raises the bar every month until the price catches up.
When pricing math becomes bookkeeping
A calculator answers one question at a time using numbers you supply. It cannot tell you what your costs actually were last quarter, because it has never seen your transactions.
GlassJar records income and expenses on one entry screen instead of a separate screen for each transaction type, and the report library lets you choose which reports sit on your dashboard. Once the transactions are in, margin by product and cost trends over time stop being something you calculate and start being something you look up. See what is included on the features page.
Frequently Asked Questions
What is the difference between markup and margin?
Markup is profit measured against your cost. Margin is profit measured against your selling price. An item costing $6.00 and selling for $12.00 carries a 100 percent markup and a 50 percent margin. Same sale, same six dollars of profit, two different percentages.
How do I calculate a selling price from cost and margin?
Divide the cost by one minus the margin expressed as a decimal. A $6.00 cost at a 50 percent target margin is 6.00 divided by 0.50, which gives a $12.00 price.
How do I calculate my break-even point?
Divide fixed costs by the contribution margin per unit, which is your price minus your variable cost per unit. With $4,800 in fixed costs, a $12 price, and $4.25 of variable cost, the contribution margin is $7.75 per unit, and break-even is 4,800 divided by 7.75, which rounds up to 620 units.
What is a good profit margin for a small business?
It depends heavily on the industry, since a service business and a grocery store have very different cost structures. Comparing your margin to your own past periods is usually more useful than comparing it to a general benchmark. We covered this in more detail in What’s a Good Profit Margin for Small Business?
Are these calculators free?
Yes. Every calculator on this page is free to use.
Do my numbers get saved or sent anywhere?
No. The calculators run in your browser. The figures you enter are not transmitted to GlassJar or stored on our servers.
