Cost Increase Calculator
Can my business absorb a cost increase?
Only as far as monthly profit reaches. In the sample, a rise of 8% in direct costs and 5% in the other monthly outflows adds $5,494 a month and turns a $4,700 monthly profit into a $794 loss. Prices would have to rise by 6.5% to win it back; the largest rise on every cost that still breaks even is 5.8%.
When a supplier writes that prices go up next month, the useful question is not the percentage but what it does to your own numbers. This page applies the rise to the costs it actually hits — direct costs lower your gross margin, fixed costs add to the monthly bill — and shows the new monthly profit, how long the cash above your reserve lasts, and the price rise that pays for it.
TightThis rise turns a $4,700 monthly profit into a $794 loss. The cash above your reserve would last 50.3 months · 1,532 days. A price rise of 6.5% covers it.
| Extra cost a month | $5,494 | 8% on direct costs of $49,300, 5% on other outflows of $31,000 |
|---|---|---|
| Monthly profit after the rise | -$794 | in cash terms; it is $4,700 today |
| Gross margin after the rise | 37.3% | it is 42.0% today; prices unchanged |
| Price rise that wins it back | 6.5% | on every sale, at the same volume; rounded up |
| Largest rise you can take and still break even | 5.8% | the same percentage on every cost, direct and fixed |
| Largest rise the reserve can carry | 14.1% | the same percentage on every cost, with the cash above your reserve lasting at least 6 months |
| Runway to your reserve after the rise | 50.3 months · 1,532 days | the $40,000 above your reserve at the new monthly profit |
| Cost rise | Extra a month | Monthly profit | Runway to reserve |
|---|---|---|---|
| 5% | $4,015 | $685 | Does not run out |
| 10% | $8,030 | -$3,330 | 12.0 months · 365 days |
| 15% | $12,045 | -$7,345 | 5.4 months · 165 days |
| 20% | $16,060 | -$11,360 | 3.5 months · 107 days |
| 30% | $24,090 | -$19,390 | 2.0 months · 62 days |
| 50% | $40,150 | -$35,450 | 1.1 months · 34 days |
Runs in your browser with fixed, tested formulas — the same exact arithmetic as the Business X-Ray. Nothing you type is sent or stored.
One question answered. Eight more are waiting.
This page tests one thing with a few monthly numbers. The Business Decision X-Ray runs your whole business through the same engine, day by day: nine tests, the exact breakpoint, the smallest repair and a dated action plan. Open demo of every section, no sign-up.
How this calculator works
Direct costs are the part of sales that is not gross margin: sales − sales × gross margin. A rise in them comes straight out of gross profit, so the gross margin falls while prices stay the same. The other monthly outflows — payroll, rent, software, loan payments, your own pay — are raised by their own percentage. The extra cost a month is the sum of the two increases, and the new monthly profit is today’s profit minus that sum.
The price rise that wins it back is the extra cost divided by monthly sales, rounded up to 0.1%: charging that much more on every sale, at the same volume, brings monthly profit back to where it was. It does not restore the old gross margin percentage — only the money.
The two ‘largest rise’ lines apply one percentage to every cost alike and find, to 0.01%, the highest rise at which the business still breaks even, and the highest at which the cash above your reserve still lasts the number of months you chose.
The formula
Direct costs = sales − sales × gross margin. Extra cost = direct costs × direct rise + other outflows × outflow rise.
New monthly profit = sales × gross margin − other outflows − extra cost. Price rise to win it back = extra cost ÷ sales, rounded up.
Runway to the reserve = (cash − reserve) × 365 ÷ (−new monthly profit × 12) days, rounded down, when the new profit is negative.
Worked example
The sample business sells $85,000 a month at a 42% gross margin and has $31,000 of other outflows, so it makes $4,700 a month. Its suppliers raise prices by 8% and rent, wages and insurance go up by 5%. Together that is $5,494 a month — more than the whole profit — so the business now loses $794 a month and its gross margin falls to 37.3%. The $40,000 above its reserve would last 50.3 months · 1,532 days.
Raising prices by 6.5% wins the money back. Without a price change, the largest rise on every cost it could take and still break even is 5.8%; the largest its reserve could carry for 6 months is 14.1%.
What this calculator does not do
- It uses monthly averages and assumes you sell the same volume after the rise. Lost customers after a price change are not modelled.
- It treats all direct costs as rising by the same percentage; a rise in one material only should be entered as its share of direct costs.
- It does not know when the rise starts or whether you hold stock bought at the old price — the day-by-day path is the Business X-Ray’s job. It is not tax, legal or pricing advice.
Questions people ask
Should I pass a cost increase on to customers?
That depends on your market, and this page cannot know it. What it does tell you is the price rise that keeps your profit where it was, so you can compare it with what your customers will accept — and see how long the cash lasts if you pass on only part of it.
Why is the price rise smaller than the cost rise?
Because a cost rise hits only part of each sale. An 8% rise on direct costs that are 58% of the price is about 4.6% of the price. The price rise here covers both the direct and the fixed increase in money terms.
Does raising prices restore my gross margin?
Not exactly. The price rise shown brings monthly profit back to today’s level at the same volume. Keeping the old margin percentage would need a slightly larger rise, and any customers you lose with the price change are not included.
What if costs rise in stages?
Enter the rise you expect by the time it is all in place, or run the page twice. The table shows 5% to 50% on every cost so you can see where the line is without re-typing.
Related decisions
- Minimum Price Calculator — The lowest price that covers every cost — and your margin on top.
- Break-Even Calculator — The sales and units that cover your costs — and your margin of safety.
- Cash Runway Calculator — How many months your cash lasts — now, with no sales, and if sales fall.
- How to stress test your small business cash flow
- How to Price Coffee Drinks and Keep Your Cafe Profitable
Formulas reviewed 26 September 2026
