Tools / Profit calculator
Profit calculator
Put in your price, what each unit costs you, how many you sell a month and your fixed costs. It shows your gross and net profit, both margins and your markup. Nothing you type is saved or sent anywhere.
What a customer pays for one.
Everything that comes with each sale: materials, packaging, postage you cover, and payment or marketplace fees.
A typical month, even a slow one.
What you pay every month whatever you sell: software, insurance, space, a set ad budget.
Net profit a month, before tax
$420
$1,920 in sales leaves $1,260 of gross profit after the cost of each unit, and $840 of fixed costs come off that.
- Gross profit
- $1,260
- Gross margin
- 66%
- Net margin
- 22%
- Markup on cost
- 191%
You break even at 40 units a month. See the break-even chart
How to calculate gross profit
Gross profit = sales − cost of goods sold
Gross margin = gross profit ÷ sales
Take a candle business that sells 60 candles a month at $32 each. Each candle costs $11 in wax, jar, wick, fragrance, the box and the payment fee.
- Sales: 60 × $32 = $1,920.
- Cost of goods sold: 60 × $11 = $660.
- Gross profit: $1,920 − $660 = $1,260.
- Gross margin: $1,260 ÷ $1,920 = 66%.
How to calculate net profit
Net profit = gross profit − fixed costs
Net margin = net profit ÷ sales
The same business pays $840 a month for studio space, the website and insurance.
- Net profit: $1,260 − $840 = $420 a month.
- Net margin: $420 ÷ $1,920 = 22%.
That is net profit before tax. Tax, and interest on any loans, come off after it.
Gross profit vs net profit
Gross profit tells you whether each sale makes money once the thing you sold is paid for. Net profit tells you whether the whole business makes money once everything else is paid for too.
A business can pass one and fail the other. If gross profit is low, the price is too close to the cost of each unit, and selling more will not fix it. If gross profit is healthy and net profit is negative, the fixed costs are too high for the number you sell: either sell more or cut what you pay every month.
Margin and markup
Margin and markup are easy to mix up because they use the same profit. Margin divides it by the price, and markup divides it by the cost. The $32 candle that costs $11 leaves $21: a 66% margin and a 191% markup.
Pricing “at a 50% markup” and “at a 50% margin” give different prices. On an $11 cost, a 50% markup is $16.50 and a 50% margin is $22.
Whether the sales will happen
The calculator assumes you sell the number you put in. It can’t tell you whether 60 people a month want your product at that price, and that decides whether any of the profit is real.
Draper begins with demand: who wants the product and whether they will buy it. After that it takes you through the plan, the brand, the product and the website, and later helps you put it in front of real people. Copy your figures with the button above and paste them in, and they become part of its analysis of your idea.
To find the number of sales where profit starts, use the break-even calculator. If you make what you sell, the handmade pricing calculator works out a price that pays for your time.
Profit questions
No. Revenue is all the money that comes in from sales, and profit is what is left after costs. A business selling 60 units at $32 has $1,920 in revenue; if the units cost $660 and fixed costs are $840, its profit is $420.
Gross profit is what is left from sales after paying for the goods you sold. Net profit is what is left after that and every other cost of running the business, such as software, rent and insurance. A business can have a healthy gross profit and still make a net loss if its fixed costs are too high for the number it sells.
Gross profit = sales − cost of goods sold. Selling 60 candles at $32 that cost $11 each gives $1,920 in sales, $660 in cost of goods sold and $1,260 in gross profit. Gross margin is gross profit ÷ sales: $1,260 ÷ $1,920 = 66%.
Net profit is what a business keeps after all its costs. Before tax, it is gross profit minus fixed costs such as rent, software and insurance: $1,260 of gross profit minus $840 of fixed costs is $420. Net margin is net profit ÷ sales, so $420 ÷ $1,920 = 22%. Tax and interest on loans come off after that.
Cost of goods sold (COGS) is the direct cost of the products you sold in a period: materials, packaging, manufacturing and the postage you pay. The profit calculator on this page also counts payment and marketplace fees charged on each order, since they come with every sale. Costs you pay whatever you sell, like rent and software, are not part of it.
Margin is profit as a share of the price, and markup is profit as a share of the cost. A $32 product that costs $11 leaves $21: a 66% margin ($21 ÷ $32) and a 191% markup ($21 ÷ $11). On an $11 cost, a 50% markup gives a $16.50 price and a 50% margin gives $22.
There is no single good figure, because margins vary widely between kinds of business. Two checks matter more for a new business: whether gross profit at the number you can realistically sell covers your fixed costs, and whether net profit is enough to pay you.
Raise prices, lower the cost of each unit, or cut fixed costs. A price rise adds to profit on every sale if customers keep buying, and a lower cost per unit does the same for each dollar saved. Selling more raises net margin when each sale leaves gross profit, because the fixed costs are spread over more units.
Once you’ve landed on an idea, Draper works with you to turn it into a real thing.
It checks the idea holds up, designs the brand, builds the website and gets it in front of real people.