Pricing, Margin and Break-Even Guide

Correct pricing requires understanding cost, contribution margin and fixed expenses.

Variable and fixed costs

Variable costs increase per sale, such as product purchase, packaging, shipping and transaction fees. Fixed costs can include rent, hosting and monthly salaries.

Margin versus markup

Markup means profit divided by cost. Margin means profit divided by selling price.

Example: A product costs PKR 800 and sells for PKR 1,000. The profit is PKR 200, equivalent to 25% markup but 20% margin.

Contribution margin

Contribution per unit equals selling price minus variable cost. It helps determine how many sales are needed to cover fixed costs.

Break-even quantity

Break-even units = fixed costs divided by contribution per unit, provided contribution is positive.

Example: PKR 30,000 fixed monthly costs and PKR 500 contribution per unit require 60 completed sales to break even.

COD returns and losses

Failed deliveries can create shipping expenses without sales revenue. Use the COD Return Break-Even Calculator.

Cash flow

Profit and cash availability are different. Delayed payments can create cash shortages despite positive profits.

Try the Cash Flow Calculator.

More tools

Use the Product Pricing Calculator and Daraz Profit Calculator.

All financial outputs are estimates and should be verified.