Which one you need, and the mistake each one exists to stop
All four of these do arithmetic you could do yourself. The reason they are worth using is that each calculation has a standard way of going wrong, and the wrong answer looks perfectly reasonable.
Break-even: the number most owners have never worked out
Break-even is the monthly sales figure that covers your costs and leaves you at zero. The usual error is counting only the obvious fixed costs — rent, software, insurance — and forgetting the owner. If you need £2,500 a month to live on, that is a cost of the business, and a break-even figure calculated without it is telling you the point at which you work for nothing. Add your own drawings before you read the answer.
The second error is using turnover instead of contribution. If materials and subcontractors eat 40p of every pound you invoice, only 60p is available to cover fixed costs, so you need far more sales than a simple costs-divided-by-price sum suggests.
VAT: adding and removing are not the same sum
To add VAT at 20% you multiply by 1.2. To remove it you divide by 1.2 — you do not take 20% off. Take 20% off a £120 gross figure and you get £96, which is wrong; the correct net is £100. That five-pound-in-a-hundred gap is the single most common invoicing mistake in small business, and it compounds every time a price list is rebuilt from gross figures.
Worth knowing alongside it: the VAT registration threshold is £90,000 of taxable turnover on a rolling twelve-month basis, not a tax year, and the test also looks forward — if you expect to pass it in the next 30 days alone, you register now.
Pricing and margin: margin and markup are different numbers
Markup is calculated on cost; margin is calculated on the selling price. A 50% markup on a £100 cost gives a £150 price and a 33% margin, not a 50% one. Businesses that quote on markup and budget on margin are the ones that grow turnover for two years and wonder where the money went.
The other habit worth building is checking margin per product or job rather than across the business. A healthy blended margin routinely hides one line that loses money on every sale, and the more you sell of it the worse it gets.
Day rate: dividing salary by 365 is how freelancers underprice
A day rate is not an annual salary divided by working days. You cannot bill every day: holiday, illness, admin, quoting, invoicing and the weeks when work simply does not arrive all come out of the total. Plan on billing somewhere in the region of 130 to 180 days a year rather than 250, and add the costs an employer used to absorb — pension, equipment, software, insurance, training, and the employer's National Insurance nobody is paying on your behalf any more.
Run the number, then check it against what you actually need to earn. A day rate that only works at 100% utilisation is not a rate, it is a hope.
Common questions
Are these calculators really free?
Yes. No sign-up, no email address, nothing stored. They run entirely in your browser, so the figures you type never leave your device. Bookmark them and use them as often as you like.
Can I rely on these figures for my tax return?
Treat them as a sanity check rather than a filing. They use current standard UK rates and will get you to the right order of magnitude quickly, which is what they are for. Anything that goes to HMRC should be based on your actual records, and if a number surprises you that is worth a conversation with an accountant rather than a second calculator.
Which should I use first?
Break-even, almost always. Until you know the monthly figure that keeps the lights on, pricing decisions have nothing to be measured against.