Industry presets

Tap a tile to load typical price, cost and fee assumptions for that industry. Edit any value below.

Per-unit economics

Monthly volume & overhead

Legend — ■ Processing • ■ Shipping • ■ COGS • ■ Profit

Apply proportional tweaks to see how margins and profit respond.

Gross margin vs. markup — what’s the difference

Many Canadian business owners use the words “margin” and “markup” interchangeably, but they measure different things. Gross margin is the percentage of revenue left after variable costs (COGS, shipping, payment fees and discounts). It answers: “Of every dollar I keep after direct costs, how much remains?” Markup is the percentage you add to cost to arrive at price. Markup answers: “How much higher is my selling price compared to my cost?” The same business can report a 33% margin and a 50% markup on the identical transaction. The calculator above shows both metrics side-by-side so your team speaks one language when planning pricing and promotions.

Realized price is the starting point

Your list price isn’t your realized price. Once you apply discounts, account for returns/defects, and subtract payment processing fees, your “revenue per unit” shrinks. Promotions that lift volume but erode realized price can reduce total profit. That’s why this tool applies discounts and returns up front and then layers in all variable costs before computing profit per unit, margin and markup. Seeing this clearly helps owners decide when a sale is really a sale.

Four margin killers to watch

• COGS creep: Supplier price increases or packaging changes add pennies per unit that quickly compound. Audit purchase orders and renegotiate annually.
• Freight & fulfillment: Dimensional weight and last-mile surcharges can swing unit economics. Optimize carton sizes, use zone-based shipping, and compare 3PL quotes.
• Payment fees: Card rates vary by brand, card type, and gateway. Consider debit routing, surcharging (where compliant), or volume-tier pricing.
• Discount addiction: Blanket sales train customers to wait. Use targeted offers (email/SMS), bundles and value-add bonuses to protect AOV.

Setting prices in Canada: taxes and psychology

In most provinces, you’ll post a pre-tax price and charge GST/HST/PST at checkout. Because sales tax doesn’t change your margin percentage, set your price ladder based on pre-tax amounts and test tidy psychological thresholds ($49, $99, $249). Use “good/better/best” tiers to encourage trade-ups. Your calculator outputs show how an extra dollar of price flows directly to profit once variable costs are covered — a useful anchor for pricing meetings.

Margins by industry (rules of thumb)

Break-even price and contribution margin

Break-even price is the selling price where profit per unit equals zero after variable costs. Above break-even, each additional sale adds contribution margin that helps cover overhead. The calculator also allocates monthly overhead across units to show a “fully loaded” picture, but strategic decisions (like “should we run this promo?”) should focus on contribution margin first.

Levers to improve margin — practical playbook

1. Negotiate COGS: Offer longer commitments for better pricing; consolidate SKUs to increase MOQs; reduce packaging SKUs.
2. Engineer AOV: Bundles, thresholds (free shipping $75+), and post-purchase upsells raise realized price with minimal cost.
3. Optimize shipping: Right-size boxes, multi-item consolidation, and regional carriers can cut $1–$3 per order.
4. Fee efficiency: Ask gateways for volume-tier pricing; encourage Interac debit where possible; minimize chargebacks.
5. Smart discounts: Target high-margin SKUs, limited windows, and loyalty-led offers to avoid blanket dilution.
6. Reduce returns: Clear sizing charts, UGC photos, and QA checks lower return rates — a hidden margin boost.

When to finance growth

If your unit economics are strong, outside capital can accelerate purchasing, marketing or equipment upgrades. Use the results here to demonstrate to lenders that each dollar invested generates predictable gross profit. Canadian lenders often look for stable margins, healthy inventory turns and cash-flow coverage; documenting contribution margin and seasonality strengthens your case.

How to use this calculator with your team

• Run monthly pricing/COGS reviews and save a PDF report for your files (use “Download PDF Report”).
• Create a “red/yellow/green” margin guardrail by category and flag SKUs that slip.
• Model promotions before launch; require margin sign-off for deep discounts.
• Share a one-page summary with sales, ops, and finance so decisions reflect the same numbers.

Limitations

This tool focuses on unit-level variable economics and a simple overhead allocation. It doesn’t model payroll burdens, capex depreciation, multi-channel fees, or complex tax scenarios. Treat results as planning estimates and consult your accountant for financial reporting.

What’s the formula for gross margin

Gross margin % = (Realized price − variable costs) ÷ Realized price. Variable costs include COGS, shipping/fulfillment, payment fees and discounts.

How is markup different from margin

Markup % = Profit ÷ Variable costs. Margin % = Profit ÷ Realized price. A 50% markup corresponds to a 33.3% margin.

How do discounts affect margin

Discounts reduce realized price. If costs don’t change, margin % falls. Use targeted offers and bundles to maintain AOV.

Why include returns/defects

Returned or defective units consume costs but don’t generate revenue; modeling a realistic returns rate avoids overstated margins.

Do I include sales tax

No. Sales tax is collected on behalf of government and doesn’t impact margin %; enter pre-tax prices and costs.

Can service businesses use this

Yes — treat “COGS” as delivery cost per job (contractors, tools, platforms) and set shipping to $0 if not applicable.