Profit Calculator

Profit in Simple Terms

Profit is the money left after you subtract your total costs from your total revenue. It is the clearest single number for answering a basic question: did this product, service, or business activity create value after all expenses were paid? When you calculate profit correctly, you can make smarter pricing decisions, compare products fairly, and understand whether growth is actually helping or quietly increasing losses.

People often talk about “revenue” as a sign of success, but revenue alone can be misleading. A business can have high sales and still lose money if costs rise just as quickly. Profit turns raw sales into a more honest measurement. That’s why this Profit Calculator focuses on both sides of the equation: what you earn and what it costs you to earn it.

The Core Formula and What It Really Means

The core formula is straightforward:

Profit = Revenue − Total Costs

Revenue is the money you collect from sales. Total costs include everything required to generate those sales. Some costs increase with each unit you sell, while others stay the same regardless of volume. If you want a reliable profit estimate, you need to separate costs into categories and include them all.

Fixed Costs vs Variable Costs

Most real-world profit calculations become confusing because “cost” is not one number. It is a combination of variable costs and fixed costs:

• Variable costs change with volume. Examples include materials, packaging, per-order shipping, commissions, and per-transaction payment fees.
• Fixed costs stay the same within a time period. Examples include rent, software subscriptions, salaries (in many cases), insurance, and equipment leases.

When you calculate profit for a product, variable costs are usually the easiest to connect to the product because they occur for every unit sold. Fixed costs are often shared across many products or activities. This calculator lets you add fixed costs so you can see how they impact total profit and break-even.

Why Margin and Markup Are Different

Profit is a currency amount, but margin and markup are percentages that help you compare products. They are commonly confused, and mixing them up can lead to pricing mistakes.

Profit margin measures profit as a share of revenue:

Profit Margin (%) = Profit ÷ Revenue × 100

Markup measures profit as a share of cost:

Markup (%) = Profit ÷ Cost × 100

A quick example shows the difference. If an item costs 40 and sells for 50, profit is 10. Margin is 10 ÷ 50 = 20%. Markup is 10 ÷ 40 = 25%. Same profit, different percentage. If you set prices using margin targets, you should use margin formulas. If you set prices using markup targets, use markup formulas.

Contribution Margin and Why It Powers Break-Even

Contribution margin is the amount each unit contributes toward covering fixed costs and then creating profit:

Contribution per Unit = Unit Price − Unit Variable Cost

This number matters because it tells you how much “profit potential” each unit has before fixed costs are considered. If your contribution margin is small, you may need to sell a large number of units to break even. If your contribution margin is negative, you lose money on every unit and break-even is impossible unless costs or price change.

How Break-Even Works

Break-even is the point where profit becomes zero. You are no longer losing money, but you are not making money yet either. In unit terms, break-even looks like this:

Break-even Units = Fixed Costs ÷ Contribution per Unit

If you also have fees that scale with revenue, contribution per unit needs to account for that. For example, if a platform takes 5% of your selling price, your effective unit revenue becomes (Unit Price × (1 − 0.05)). The Break-Even tab in this tool includes an optional fee percentage so the break-even estimate matches the reality of fee-driven marketplaces.

Setting a Price for a Target Margin

Many pricing decisions start with a target margin. If you want a 30% margin, you are saying that 30% of the selling price should remain as profit after variable costs (and any allocated fixed costs per unit).

If fees are charged as a percentage of the selling price, you can think of them as reducing effective revenue. A price that looks profitable on paper might become less profitable after fees, refunds, or payment processing charges. The Target Price tab allows you to include a fee percentage so your required price reflects those realities.

Setting a Price for a Target Markup

Markup-based pricing is common in retail and product resale. If you apply a 50% markup to a cost of 40, the selling price becomes 60. This method is simple and consistent, but it can hide important details when fees are applied on price or when fixed costs are large.

Markup is useful for quick rules of thumb and for comparing suppliers. Margin is often more useful when you care about profitability relative to what customers pay, especially when you compare different products with different price points.

How Fees Change Profit

Fees can be fixed amounts (like a monthly tool subscription) or variable amounts (like a payment processing fee per transaction). Some fees are a percentage of revenue, which means the fee increases when you raise prices. That can surprise people who assume profit grows linearly with price.

The Profit & Margin tab includes both a fee percentage and a fixed fee field. This makes it easy to model a platform fee plus a subscription fee, or a card-processing percentage plus a flat transaction charge. When you include fees, you can see profit, margin, and break-even update immediately.

Why Profit per Unit Can Mislead Without Fixed Costs

Profit per unit is a helpful metric, but it is incomplete if you ignore fixed costs. If you earn 10 profit per unit and sell 100 units, you might expect 1,000 profit. But if you had 900 in fixed costs for the period, your actual profit is only 100. Fixed costs do not care about your per-unit profit; they only care about total contribution.

That’s why the calculator displays contribution per unit alongside profit and includes break-even calculations. When you can see contribution, you can estimate how many units are required to cover fixed costs, not just how much you “make per unit” in isolation.

Multi-Item Profit for Carts, Bundles, and Catalogs

Many businesses do not sell one product. They sell bundles, run promotions, or have catalogs with multiple SKUs. In those cases, profit calculations should include the mix of products sold, not just the “average” item.

The Multi-Item tab lets you enter multiple items with unit price, unit cost, and quantity. It totals revenue and variable costs across all items, then applies optional fixed costs and fees once. This approach is useful for comparing product lines, understanding how a sale mix changes profit, and identifying which item contributes the most profit in a period.

Common Mistakes in Profit Calculations

Profit errors usually come from missing costs or using inconsistent units. These are some common problems:

• Mixing time periods (monthly rent with weekly revenue) without converting.
• Ignoring fees such as platform commissions, payment processing, or refunds.
• Underestimating unit cost by forgetting packaging, labeling, or wastage.
• Using markup when you intended margin, which can lead to a lower margin than expected.
• Forgetting fixed costs, which can make a product look profitable when the business is not.

A reliable planning habit is to list costs the same way your bank account experiences them. If you pay it per unit, include it in variable costs. If you pay it once per month, include it as fixed costs. This keeps your profit estimate aligned with reality.

How to Use This Profit Calculator

If you want a quick profit estimate, start with Profit & Margin. Choose whether you want per-unit inputs plus quantity or total revenue and total variable costs. Add fixed costs and fees if they apply, then calculate.

If you are deciding what price to charge, use Target Price. Enter unit cost, any allocated fixed cost per unit (if you want to build overhead into pricing), and a fee percentage if fees are charged on the selling price. Choose whether your target is margin, markup, or profit per unit.

If you are planning volume goals, use Break-Even. Enter unit price, unit variable cost, fixed costs, and optional fees. You will get break-even units and revenue, and you can also add an optional target profit to see how many units you need to reach a specific profit goal.

If you have multiple products or bundles, use Multi-Item. Add rows and fill in unit price, unit cost, and quantity. Apply fixed costs and optional fees once and calculate totals to see combined profitability.