Break-Even Price Calculator
Find the minimum selling price needed to hit your target profit margin.
How to price for a target margin
If you want your profit margin to be a specific percentage of your selling price (not just a markup on cost), the math isn't as simple as adding a percentage to your cost. This calculator uses the margin-based pricing formula: price = cost ÷ (1 − desired margin), which correctly solves for the price where your margin lands exactly where you want it.
Margin vs. markup — why they're not the same
A common mistake is confusing margin (profit as a percentage of the selling price) with markup (profit as a percentage of the cost). A 25% margin and a 25% markup produce different prices — margin is always calculated on a larger base (the selling price), so achieving a 25% margin actually requires a higher markup percentage than 25%. Our dedicated Markup Calculator can help you see the relationship explicitly.
Getting this right matters for accurate pricing — underestimating the difference between margin and markup is a common way businesses accidentally underprice their products.
Frequently Asked Questions
What's the formula for break-even price based on margin?
Price = Cost ÷ (1 − Desired Margin as a decimal). For example, with a $15 cost and a 25% target margin: $15 ÷ (1 − 0.25) = $20.
Why can't I just add my margin percentage to my cost?
Because margin is calculated as a percentage of the selling price, not the cost — simply adding the percentage to cost calculates a markup instead, which results in a lower actual margin than intended.
What's a healthy profit margin for a small business?
It varies widely by industry — retail often runs 20-50% gross margin, services can run much higher, while wholesale/distribution often runs lower. Research your specific industry's typical margins for context.
Does this calculator account for taxes or overhead?
No — this calculates the price needed to hit a margin over your direct unit cost only. Overhead, taxes, and other business expenses should be factored in separately or included in your "unit cost" input if you want them reflected.
What if my desired margin is very high, like 90%?
As your target margin approaches 100%, the required price grows extremely quickly toward infinity, since you're dividing by a number approaching zero — very high margins require correspondingly very high prices relative to cost.
Should I use margin or markup to price my products?
Either can work, but it's important to know which one you're using and be consistent, since they produce different prices for the "same" target percentage. Margin is often preferred for financial planning since it ties directly to revenue.
How accurate is this break-even price estimate?
The math is exact given your inputs — the accuracy depends on how precisely you've calculated your true unit cost, which should include all direct costs of producing or acquiring that unit.