Is your business actually profitable?
Gross revenue is vanity. Profit margin, break-even, and cash flow are the numbers that determine whether the business survives. Calculate all three before setting prices, hiring, or expanding.
What gross margin do I need to be sustainably profitable?
How many units or clients do I need to break even?
Is this investment or project actually delivering positive ROI?
What price should I charge to hit my target margin?
What is this business worth if I want to sell it?
Do I have enough cash runway even if revenue is growing?
Recommended tools
Calculators for this decision
Profit Margin Calculator
Calculate gross profit, profit margin, markup, and price efficiency.
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Gross margin, operating margin, and net margin from revenue and cost inputs — with markup vs margin explained.
Break-even Calculator
Find break-even units and sales needed from costs and price.
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How many units or how much revenue you need to cover all costs — with contribution margin breakdown.
ROI Calculator
Calculate return on investment, net gain, and scenario comparison.
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Return on investment and annualised ROI for any project, hire, or capital spend.
Pricing Strategy Calculator
Compare price, cost, volume, margin, and profit scenarios.
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Minimum viable price from cost inputs and target margin — and how markup differs from margin.
Business Valuation Calculator
Estimate valuation from revenue, profit, and industry multiple assumptions.
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Rough valuation estimate using revenue multiples and EBITDA — for context before a sale or raise.
Cash Flow Calculator
Calculate net cash flow from inflows, outflows, receivables, and payables.
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Monthly cash in vs cash out — to spot when profit and cash diverge.
Practical guide
Three numbers every business owner needs to know
The three most important numbers in any business are gross margin, break-even point, and cash runway. Gross margin tells you how much of each sale is left after direct costs. Break-even tells you the minimum revenue to stay solvent. Cash runway tells you how many months you can operate if revenue stops.
Most small business owners know their revenue. Fewer know their gross margin. Almost none know their break-even point precisely. This is a serious problem: a business can be growing revenue, showing accounting profit, and still run out of cash — because profit and cash flow are not the same thing.
Profit is accrual-based: it counts revenue when you invoice, and expenses when you incur them. Cash flow is real money moving in and out. If your clients pay 60 days late, a profitable month can still produce a cash crisis. The cash flow calculator shows when these gaps appear before they become crises.
For pricing decisions specifically: start with your actual costs (materials, direct labour, overhead allocation), calculate your break-even price per unit, then add your target margin on top. Do not set prices by looking at competitors without understanding your own cost structure — a competitor with lower fixed costs can profitably charge less than you can.
Worked example
See it in action
Scenario: A consulting business trying to set a minimum viable day rate
- 1Fixed monthly costs: Office: £800, software: £200, accountant: £150, insurance: £100, other: £250 = £1,500/month.
- 2Variable cost per day: Travel, direct expenses, contractor tools = £75 per billable day.
- 3Billable days: Assume 15 billable days per month (realistic for admin, sales, and holidays).
- 4Break-even day rate: Fixed costs (£1,500 / 15 days) + variable (£75) = £175/day just to break even.
- 5Target margin rate: For 40% gross margin: break-even ÷ (1 - 0.40) = £175 ÷ 0.60 = £292/day minimum to hit 40% gross margin.
Result
A consulting business with £1,500/month fixed costs needs at least £292/day on 15 billable days to achieve 40% gross margin. Pricing below that means either the margin target slips or overhead must come down. The calculator makes this visible before you quote a client.
Watch out
Common mistakes to avoid
Confusing markup and margin. A 50% markup is not a 50% margin. Margin = profit ÷ revenue; markup = profit ÷ cost. At 50% markup, your margin is 33%.
Not including the owner's salary as a business cost. If you are working in the business, your labour has a value. Not paying yourself does not mean the business is profitable.
Ignoring cash flow timing when counting revenue as profit. Invoice raised ≠ cash received.
Setting prices based on competitors without understanding your own cost structure — you may have different overheads.
Using best-case revenue assumptions to calculate break-even. Model conservatively: lower volume, slower payment, higher costs.
Treating ROI as percentage alone without checking absolute cash return and payback period.
Before you decide
Decision checklist
Do you know your gross margin percentage (not just gross profit in pounds)?
Have you calculated your break-even point in both units and revenue?
Is the owner's market-rate salary included in your fixed cost structure?
Have you projected cash flow separately from profit for the next 3–6 months?
For any new project or hire: have you calculated ROI and payback period?
Have you stress-tested your pricing if unit costs rise 10–15%?
Calculated your numbers? Take the next step.
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Frequently asked questions
What is the difference between gross margin and net margin?
Gross margin is revenue minus direct costs (cost of goods sold or direct labour), divided by revenue. Net margin subtracts all costs — including fixed overheads, interest, and tax. A business with 60% gross margin and heavy fixed costs can still have a thin or negative net margin. Both matter: gross margin measures unit economics; net margin measures overall business profitability.
How do I calculate break-even correctly?
Break-even (in units) = Fixed costs ÷ Contribution margin per unit. Contribution margin = selling price minus variable cost per unit. Break-even (in revenue) = Fixed costs ÷ Contribution margin ratio. The contribution margin ratio is contribution margin per unit ÷ selling price. The CalcBix break-even calculator applies this formula and shows both the unit and revenue break-even.
What is a good gross margin for my type of business?
Benchmarks vary significantly by sector. Software and SaaS: 70–85%. Professional services: 40–60%. Retail: 30–50%. Manufacturing: 20–40%. Food and hospitality: 10–25%. Use sector benchmarks as a reference but focus on whether your specific margins cover your fixed costs with surplus for growth and owner pay.
Why is my business showing profit but always short of cash?
This is the classic profit vs. cash flow gap. It usually comes from: slow-paying customers (revenue recognised before cash received), upfront inventory or project costs paid before invoicing, growing payables, or timing differences in tax and VAT. Use the cash flow calculator to model monthly cash movements and find where the gap appears.