Beaconshire Advisory · www.beaconshireadvisory.com · Profit Margin, Markup & Pricing Calculator · printed
Calculator · Operations
What should I charge — and what does a discount really cost?
Price from cost and a target margin, from a markup, or back out the margin on a price you already charge. The calculator nets out processing fees and variable selling costs, allocates overhead per unit, and shows exactly how many more units a discount forces you to sell to earn the same money.
Where each dollar of price goes
Cost, selling costs, overhead and what is left.
The discount table
How many units you must sell at each price to earn the same total contribution you earn today. Highlighted rows: ±10%.
Markup ↔ margin reference
The conversion most pricing mistakes come from.
What this means
Pricing read with a CFO’s eye.
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How it works
Methodology & assumptions
- Definitions. Gross profit = price − cost.
Margin = gross profit ÷ price.Markup = gross profit ÷ cost. Price from margin:cost ÷ (1 − margin). Price from markup:cost × (1 + markup). Conversion:margin = markup ÷ (1 + markup). - Contribution per unit = price − cost − processing fee (price × % + fixed) − other variable costs. This is the amount each sale contributes toward overhead and profit; it is the number the discount table protects.
- Net per unit = contribution − allocated overhead. Overhead allocation is only meaningful at the volume you entered; the break-even calculator treats fixed costs properly.
- Discount table. For each price change the new contribution per unit is recomputed (fees scale with price), and the units required to match today’s total contribution are
today’s contribution × today’s units ÷ new contribution. “Never” means the new price loses money on every unit. - Not modeled. Price elasticity (the table tells you the volume you would need; it cannot tell you whether customers will buy it), tiered pricing, bundles, and tax effects.
This calculator is an educational estimate built from published figures and the assumptions listed above. It is not tax, legal, or financial advice, does not account for every provision that may apply to you, and is not a substitute for a return prepared from your actual records. Figures are checked when published and may lag mid-year changes.
Questions
Common questions
Margin or markup — which should I use?
Use margin when you are managing the business (it compares to your P&L and to industry benchmarks) and markup when you are building a quote from costs. Just never mix them: a 50% markup is a 33% margin, and a 50% margin requires a 100% markup.
What gross margin should I aim for?
It depends on what overhead has to be covered. As rough reference points: retail and distribution often run 25–45% gross, restaurants 60–70% on food but much less after labor, product e-commerce 40–60%, professional services 50–70%, software 70%+. The right question is whether contribution at your realistic volume covers fixed costs with room for the owner — the break-even calculator answers that.
Why does a 10% discount need so much more volume?
Because the discount comes entirely out of contribution, not out of revenue. If a $100 item costs $60 to deliver, you keep $40. A 10% discount drops the price to $90 and the contribution to $30 — a 25% cut in what you keep — so you need a third more units just to stand still. Thin-margin businesses are hit hardest.
Should I pass card fees to customers?
Surcharging is legal in most states within card-network rules (generally capped at the actual cost, max 3%, with disclosure), and cash discounts are allowed everywhere. Whether it is good for the business depends on your customers; the calculator shows what the fees cost you so you can decide with the number in front of you.
How do I price a service by the hour?
Start with your fully loaded cost per billable hour (see the employee cost calculator for the loaded-cost method), then apply the target margin here. Remember that utilization is the hidden variable: a $100 loaded cost at 60% utilization is really $167 an hour.
Keep going
Related calculators
Want a pricing model built on your real cost structure?
Pricing, margin and overhead analysis is part of every CFO Advisory engagement. We rebuild unit economics from your books, then set prices that hold up when volume moves.
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