Margin & Break-even Calculator
Marketing ToolsMargin, markup and break-even — and why pricing by markup quietly costs you money.
What the customer pays, before tax.
Gross margin
40%
You keep ₹400 on every unit sold
(price − cost) ÷ price × 100
- Markup
- 66.67%
- on cost, not on price
- (price − cost) ÷ cost × 100
- Profit per unit
- ₹400
- price − cost
- Break-even ROAS
- 2.5x
- what ads must return
- 1 ÷ margin
- Cost as % of price
- 60%
- 100 − margin
Margin and markup are not the same number and the gap widens as they grow: a 50% markup is only a 33.3% margin. Price from the margin you need, not the markup that sounds like it.
How this is calculated
Gross margin = (price - cost) / price x 100 Markup = (price - cost) / cost x 100 Price for a target margin price = cost / (1 - margin) <- divide, do not multiply Break-even contribution = price - variable cost units = fixed costs / contribution revenue = units x price The link to advertising break-even ROAS = 1 / margin
How it works
Margin and markup describe the same profit against two different denominators. Margin measures it against the price the customer pays; markup measures it against what the item cost you. Buy for ₹600, sell for ₹1,000, and you have made ₹400 either way — but that is a 40% margin and a 66.7% markup. Same rupees, two very different-looking percentages.
The confusion is not symmetrical, and it only ever costs you money in one direction. Someone who wants a 40% margin and marks their cost up by 40% prices at ₹840, which is a 28.6% margin. They hit their target every month and miss it every month. The correct move is to divide: price = cost ÷ (1 − 0.40) = ₹1,000.
Break-even asks a different question: not what each unit earns, but how many of them it takes before the business as a whole is level. Fixed costs — rent, salaries, the software subscriptions — are paid whether you sell anything or not. Each sale contributes price minus variable cost toward them, and break-even is simply the point where those contributions have added up to the fixed costs.
Margin is also the number every advertising decision quietly depends on. Break-even ROAS is 1 ÷ margin, so a 40% margin needs a 2.5x return before ads make money and a 20% margin needs 5x. Most advertisers guess their margin, which means they are guessing their break-even, which means every ROAS verdict downstream of it is a guess too.
Worked example
An item costing ₹600, sold at ₹1,000, in a business with ₹2,00,000 of monthly fixed costs
- Profit per unit = 1000 - 600 = 400
- Gross margin = 400 / 1000 x 100 = 40%
- Markup = 400 / 600 x 100 = 66.7%
- Break-even ROAS = 1 / 0.40 = 2.5x
- Contribution = 1000 - 600 = 400 per unit
- Break-even units = 200000 / 400 = 500 units
- Break-even sales = 500 x 1000 = 5,00,000 of revenue
40% margin · 66.7% markup · 500 units, or ₹5,00,000, a month to break even
How to use it
- Pick a mode: margin and markup from a cost and a price, the break-even quantity, or the price that hits a target margin.
- Enter the unit cost — what one item costs you to make or buy, not including rent or salaries.
- Enter the selling price before tax. GST is added on top of this figure, so leave it out here.
- For break-even, separate your costs: fixed costs are paid monthly regardless of sales, variable costs are paid per unit sold.
- Read the markup figure next to the margin. If you have been pricing by marking up, the gap is what you have been leaving on the table.
What this tool does not do
- This is gross margin, not net margin. It accounts for the direct cost of the goods, not overheads, salaries, tax or the cost of returns.
- Break-even assumes your price and variable cost stay constant as volume grows. Bulk discounts, shipping bands and payment-processor tiers all break that assumption at scale.
- It works in units. A business selling several products at different margins needs a blended margin, which this tool does not calculate for you.
- GST is excluded throughout. Enter pre-tax figures, or the margin will be overstated.
- Break-even tells you when you stop losing money, not when the business is worth running. That is a judgement about the return on your time and capital.
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit, against different bases. Margin divides profit by the selling price; markup divides it by the cost. A ₹400 profit on a ₹1,000 sale of a ₹600 item is a 40% margin and a 66.7% markup. Margin can never exceed 100%; markup has no upper limit.
How do I price something for a 40% margin?
Divide the cost by 0.60 — that is, cost ÷ (1 − 0.40). A ₹600 item becomes ₹1,000. Do not multiply the cost by 1.40, which gives ₹840 and only a 28.6% margin. Dividing is the whole trick, and it is where most pricing mistakes start.
Is a 50% markup the same as a 50% margin?
No. A 50% markup is a 33.3% margin. The two only agree at zero. The gap widens as the numbers grow: a 100% markup is a 50% margin, and a 400% markup is an 80% margin.
What counts as a fixed cost and what counts as variable?
Fixed costs are paid whether or not you sell anything this month: rent, salaries, software, insurance. Variable costs are paid per unit sold: materials, packaging, shipping, payment-gateway fees. Anything that scales with volume is variable, even if you pay it monthly.
What is a good gross margin?
It depends entirely on the model, and any single figure quoted as a benchmark is unreliable. Grocery retail runs on single digits and survives on volume; software runs at 80% and survives on retention. The useful comparison is against your own break-even and your own last quarter, not an industry average.
Why does my ad platform's ROAS need my margin?
Because ROAS measures revenue, not profit. Break-even ROAS is 1 ÷ margin: at a 40% margin you need 2.5x before advertising makes money, and at 20% you need 5x. A 4x ROAS is excellent in the first case and a loss in the second. Work out the margin here, then take it to the ROAS calculator.
Does this include GST?
No. Enter pre-tax figures. GST is collected on behalf of the government and passed on, so it is not revenue and including it would overstate your margin. Use the GST calculator to work out the tax-inclusive price after you have set the margin here.
Can margin be more than 100%?
No. Margin is profit as a share of the selling price, so it approaches 100% as cost approaches zero but never passes it. Markup has no ceiling — an item costing ₹1 and selling for ₹100 is a 9,900% markup and a 99% margin.
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Last updated 6 September 2026.