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Profit Calculator
Time:
4 hours
Complexity:
Phase:
Grow
User rating:
(4 Votes)

The Profit Calculator helps you to estimate if your business is profitable. Will your earnings with products or services cover your costs? Costs are divided into two types: variable and fixed costs. Knowing if your business is profitable is a critical success factor. It tells you if you need to make changes or look for new business ideas.

Download the Profit Calculator in Excel to calculate the profit of your new or current business. Get inspired and see how Fashionista used the Profit Calculator.

How to use

You can use the Profit Calculator by yourself but may need somebody from your financial department (if you have one) for sound financial estimates.

 

The Profit Calculator helps you to understand the profitability of your company. It may support you in your decisions for the strategy of your business. To be able to make these calculations you need to make some estimations.

 

Step 1: period

Determine for which period you want to calculate the profit of your business. You can calculate the profit for a week, a month or a year. Longer than a year is also possible, but how longer the period, the less reliable the result will be.

 

Step 2: item

To be able to calculate your profit you need to think about how you earn money. What are the products or services that you sell? For what do customers or partners have to pay? The item can be a product, but also a service. Write down these items for your business.

 

Step 3: numbers sold

For each item determine how many of them will be sold in your selected period. Write down how many times the product or service is sold.

 

Step 4: price

Write down the price of one item. Determine how much money you will charge the customer for one product or one service.

 

Step 5: variable cost

How much does it cost to make one product or deliver once a service? Determine the costs for creating just one item. Only include those costs that are variable, meaning those costs that only exist when a product or service is being made and sold. Think of materials, handling, production or labor. Write down the variable costs per item.

 

Step 6: fixed costs

What are the costs regardless of the amount of products made and sold? Determine the fixed costs of your business. Think of loans, insurance, rent, gas, electricity, water or phones. Fixed costs are costs that occur independently of the number of products made. Enter the costs for people, rent, services and telecom in the Excel template and add any additional fixed costs items.

 

The results

The Profit Calculator will give you three results: total revenues, total costs and the profit. The total costs are the sum of variable and fixed costs. The profit is calculated by subtracting the total costs from the total revenue. Remember that the Profit Calculator only provides an estimation of your company’s profits. It simply shows if you could make some profit based on your estimations. With the Profit Calculator you can play with prices, costs and sales volumes to see how much you need to sell to make a profit.

Case

Case: Hardware Store overcomes economic difficulties

Euran rakennustarvike is a hardware retail company owned by the H...