I want to run a small business
Good numbers help a small business last. This page walks you through pricing, profit and tax in a simple order. It takes about 20 minutes.
- 1
Set your hourly rate
If you sell your time, start here. Type the yearly income you want, your costs and how many hours you can bill.
How much should I charge per hour as a freelancer?
Find my rate →Tip: You cannot bill every hour you work. Leave time for admin, sales, holidays and sick days.
- 2
Price your products with markup
Markup is how much you add on top of what an item costs you. Type your cost and markup percent to get a selling price.
What price should I sell at to add my markup?
Set my price →Tip: Markup and margin are not the same. A 50% markup gives about a 33% margin.
- 3
Check your profit margin
Margin is the share of the price you keep as profit. Type your cost and selling price to see it.
What profit margin am I making on what I sell?
Check my margin →Tip: Look at margins product by product. One low-margin item can quietly eat your profit.
- 4
Find your break-even point
Break-even is how many sales you need before you start making money. Type your fixed costs, price per item and cost per item.
How many do I need to sell to stop losing money?
Find my break-even →Tip: Knowing your break-even helps you decide if a new product or rent increase makes sense.
- 5
See your overall profit
Type the money you bring in and what you spend. We show gross, operating and net profit and their margins.
How much profit is my business really making?
Check my profit →Tip: Review your profit every month. Small problems are easier to fix when caught early.
- 6
Plan sales and discounts
Discounts can bring in buyers but cut into profit. Type the price and discount to see the sale price and savings.
How much will I pay after the discount?
Plan my discount →Tip: Before running a sale, check that the discounted price still covers your cost per item.
- 7
Add sales tax to your prices
Type a price and the tax rate to add sales tax, or take the tax out of a total. In India, use the GST calculator; in the UK or EU, use the VAT calculator.
How much sales tax will I pay on this price?
Add sales tax →Tip: Tax rules differ by place and product. Keep good records and ask a tax professional if unsure.
Questions people ask
What is the difference between markup and margin?
Markup compares profit to your cost. Margin compares profit to the selling price. For example, an item that costs 10 and sells for 15 has a 50% markup but a 33% margin.
How do I calculate break-even?
Divide your fixed costs by the profit you make on each sale (price minus cost per item). The answer is how many sales you need to cover all your costs.
What is a good profit margin for a small business?
It changes a lot by industry. Shops often have lower margins than service businesses. Compare yourself with similar businesses and track your own trend over time.
How much should I charge as a freelancer?
Start with the yearly income you need, add your business costs and taxes, then divide by the hours you can really bill. Check what others in your field charge too.