Business calculators

Which business calculator should you use?

The right calculator depends on what question you are trying to answer. If you want to know what your business is worth to a buyer, start with the Business Valuation Calculator or the Small Business Valuation Calculator. If you want to understand day-to-day profitability, the Business Profit Calculator separates gross, operating, and net profit in one view. And if you are planning a new product or pricing model, the Break-Even Calculator tells you exactly how many units you need to sell before you make a cent of profit.

For return on investment questions — whether a new hire, a piece of equipment, or a marketing campaign makes financial sense — use the Business ROI Calculator. Cash flow shortfalls and financing scenarios are best handled with the Cash Flow Calculator and Business Loan Calculator.

Key business formulas every owner should know

You do not need an accountant to understand your numbers. These four formulas cover most of what small business owners need on a daily basis.

Gross profit margin

Gross profit = Revenue − Cost of goods sold (COGS). Then Gross margin % = (Gross profit ÷ Revenue) × 100. This tells you how efficiently you turn sales into profit before overhead. A product business typically targets 40–60% gross margin; a service business can run 60–80%.

Break-even point

Break-even units = Fixed costs ÷ (Price − Variable cost per unit). The number in the denominator is your contribution margin — what each sale contributes toward covering fixed costs. Once you hit break-even, every additional sale generates profit equal to your contribution margin.

Business valuation (simplified)

Most small business sales use a multiple of Seller's Discretionary Earnings (SDE), which equals net profit plus the owner's salary and non-cash expenses. Business value ≈ SDE × industry multiple. Industry multiples for small businesses typically range from 2× to 4× SDE, though high-growth or recurring-revenue businesses can command 5× or more.

Return on investment

ROI = (Net profit ÷ Cost of investment) × 100. Use this before any significant spend — a piece of equipment, a new hire, or an advertising campaign. A positive ROI is necessary but not sufficient: also consider how long it takes to realise that return (the payback period) and what else you could do with the same capital.

Common mistakes business owners make with these numbers

• Confusing gross profit with net profit. Gross profit does not account for rent, salaries, insurance, or loan repayments. Many owners who appear profitable on paper run out of cash because operating expenses erode gross profit entirely.
• Using revenue as a proxy for value. A business doing $1 million in revenue but losing money is worth less than one doing $300 000 with healthy margins. Buyers pay for earnings, not turnover.
• Setting price without knowing break-even. Discounting or undercutting competitors without knowing your own break-even point is a fast path to losses. Run the break-even calculator before any pricing change.
• Ignoring owner's compensation in valuations. If you pay yourself below-market wages, your stated profit looks better than it is. Buyers will adjust for this. SDE adds your salary back in to normalise the figure.
• Calculating ROI only on the cost, not the opportunity cost. If the best alternative use of $50 000 earns 8% per year, an investment with 6% ROI is actually a net loss compared to doing nothing.

When to use a calculator — and when to call a professional

These tools are built for estimates, planning, and learning. Use them to stress-test an idea, prepare for a conversation with an accountant, or get a rough sense of a number before committing to a decision.

Call a professional when the stakes are high and the number matters legally or financially: before selling your business, taking on significant debt, completing a tax filing, or making a major investment. A qualified business appraiser, CPA, or financial adviser brings judgement and liability that a calculator cannot provide.

Frequently asked questions