Profit Margin, Markup & Break-Even Calculator
Calculate gross profit margin, markup percentage, net profit, and units break-even volume for e-commerce, retail, and small businesses.
Profit Margin vs. Markup Equivalence Table
| Cost of Goods | Selling Price | Markup % (on Cost) | Margin % (on Revenue) | Business Category Typicality |
|---|---|---|---|---|
| $50.00 | $62.50 | 25% Markup | 20% Margin | Supermarket & grocery wholesale |
| $50.00 | $75.00 | 50% Markup | 33% Margin | Consumer electronics & appliances |
| $50.00 | $100.00 | 100% Markup (Keystone) | 50% Margin | Apparel, fashion & e-commerce retail |
| $50.00 | $150.00 | 200% Markup | 66.7% Margin | Jewelry, cosmetics & luxury goods |
| $10.00 | $100.00 | 900% Markup | 90% Margin | Enterprise software & digital downloads |
💰 Never Confuse Margin with Markup
The most dangerous pricing mistake in small business is confusing margin and markup. If a product costs \$50 and you want a 50% profit margin, adding a 50% markup will price it at \$75—yielding only a 33% margin. To achieve a true 50% margin, you must double the cost (a 100% markup) to \$100.
About this tool
How to use it
- Enter your Cost of Goods Sold (COGS per unit) and planned retail Selling Price.
- Input any marketplace or payment gateway processing fees (e.g. 3-15%).
- Switch to the Break-Even tab to enter monthly fixed overhead (rent, salaries, subscriptions).
- View your exact Gross Margin %, Markup %, Net Profit per unit, and minimum monthly units break-even target.
Why it matters
Mistaking markup for margin or underestimating platform fees causes retail and e-commerce businesses to sell at a loss. Calculating contribution margins and exact break-even sales volume ensures pricing models guarantee profitability after covering all operating overhead.
When to use it
Use this tool when launching new physical or digital products, pricing restaurant menus, negotiating wholesale rates, or modeling monthly sales quotas to sustain business overhead.
Good to know
Formulas: Gross Margin = [(Price - Cost) / Price] × 100; Markup = [(Price - Cost) / Cost] × 100; Break-Even Units = Fixed Costs / (Price - Variable Cost - Fees).
Common questions
What is the difference between Margin and Markup?
Margin is profit expressed as a percentage of the selling price (Revenue). Markup is the profit expressed as a percentage above your cost (COGS). A product that costs $50 and sells for $100 has a 100% markup, but a 50% profit margin.
What is a good profit margin for retail e-commerce?
Healthy direct-to-consumer (DTC) e-commerce brands typically target a 60% to 75% gross margin (3x to 4x markup on manufacturing cost) to comfortably absorb digital advertising (CAC), shipping, and overhead.
How is the Break-Even Point calculated?
Break-even units = Total Fixed Costs divided by Contribution Margin per unit. Once total units sold cover all monthly fixed overhead, every additional sale generates pure net operating profit.
What is Keystone Pricing?
Keystone pricing is a traditional retail rule of thumb where merchandise is priced at exactly double its wholesale cost (100% markup), resulting in a 50% gross profit margin.