Everyday Money & Business Math, Explained

Most everyday money math is not complicated — it is just easy to get slightly wrong, and small mistakes add up. This guide walks through the calculations behind paychecks, sales commissions, discounts, pricing, asset depreciation, currency conversion and personal net worth, in plain English and with a few worked examples.

Converting pay between hourly, weekly, monthly and annual

Job offers, side gigs and salary comparisons all quote pay differently, so the first skill is converting between them. The core conversions assume a standard full-time year of 52 weeks:

• Hourly to annual — annual = hourly × hours per week × 52. At $25/hour for 40 hours, that is $52,000.
• Annual to hourly — divide back out: hourly = annual / (hours per week × 52).
• Per paycheck — annual / number of pay periods. Common period counts are 52 (weekly), 26 (biweekly), 24 (semi-monthly) and 12 (monthly).
• Weekly and monthly are just the annual figure divided by 52 or 12.

Gross versus net (why your check is smaller)

Every figure above is gross pay — the amount before anything is taken out. Your actual deposit is net (take-home) pay, and it is always lower because of deductions:

• Federal income tax, and state or local income tax where it applies.
• FICA payroll taxes — Social Security and Medicare.
• Pre-tax deductions like 401(k) contributions and health insurance premiums.

BedrockCalc’s Salary calculator does pure gross unit-conversion on purpose. It does not estimate withholding or FICA, because those depend on your filing status, allowances and state — details a general tool cannot know. Treat gross as the comparison number and expect net to be meaningfully lower.

Flat versus tiered commission

Commission rewards sales, and it comes in two shapes. A flat structure is one rate on everything:

• Flat commission — commission = sales × rate. Sell $80,000 at 5% and you earn $4,000.
• Total pay — base salary + commission, the number that actually matters at the end of the month.

Tiered commission pays higher rates as sales climb, and each rate applies only to the sales inside its bracket:

• Suppose 3% on the first $50,000 and 6% on anything above it.
• On $80,000 in sales: (50,000 × 3%) + (30,000 × 6%) = $1,500 + $1,800 = $3,300.
• The effective rate is your total commission divided by total sales — here 3,300 / 80,000 = about 4.1%, which sits between the two tier rates.

The Commission calculator handles both flat and tiered plans and reports the effective rate so you can compare offers on equal footing.

Stacking discounts and adding tax

Discounts are simple one at a time, but people routinely mishandle two at once. Start with the basics:

• Sale price — price × (1 − discount%). A $200 item at 25% off costs $150.
• You save — price × discount%, or $50 in that example.

When two discounts stack, they multiply — they do not add:

• A 20%-off coupon on a 30%-off item is not 50% off.
• It is price × (1 − 0.30) × (1 − 0.20) = price × 0.70 × 0.80 = price × 0.56, so 44% off.
• Sales tax then applies to the discounted price: final = sale price × (1 + tax%).

The Discount calculator supports stacked discounts and an optional tax rate so the final number is the one you will actually pay at the register.

Profit margin versus markup — the difference that trips everyone up

This is the single most confused pair in business math, and mixing them up quietly wrecks your pricing. Both measure the same profit, but against different bases:

• Margin is profit as a share of the selling price: margin = profit / price.
• Markup is profit as a share of the cost: markup = profit / cost.

Because the denominators differ, the two percentages diverge on any profitable sale — and markup is always the larger number.

A worked example

Say an item costs you $60 and you sell it for $100, so profit is $40:

• Margin = 40 / 100 = 0.40 = 40%.
• Markup = 40 / 60 = 0.667 = 66.7%.

Same $40 profit, same transaction — but 40% margin equals a 66.7% markup. A second example makes the gap obvious: double the cost (“100% markup”) on a $50 item gives a $100 price, yet that is only a 50% margin. If a supplier promises “50% margin” and you apply 50% as a markup, you will underprice every unit and lose money. When you have a target in mind, decide first whether it is a margin or a markup, then solve for price:

• Price from a target margin — price = cost / (1 − margin).
• Price from a target markup — price = cost × (1 + markup).

The Margin calculator solves in both directions and shows margin and markup side by side so the two never get swapped.

Depreciation and book value

Depreciation spreads the cost of a long-lived asset across the years it is used, rather than expensing it all at once. Three common book methods each produce a different yearly figure:

• Straight-line — the same amount every year: (cost − salvage) / useful life. A $10,000 asset with $1,000 salvage over 5 years depreciates $1,800 a year.
• Declining-balance — a fixed rate applied to the shrinking book value: book value × rate. It is front-loaded, taking bigger deductions early and smaller ones later.
• Sum-of-years-digits (SYD) — also front-loaded but gentler: (remaining life / sum of the years' digits) × depreciable base. For a 5-year asset the digits sum to 15, so year one takes 5/15, year two 4/15, and so on.

Two ideas tie it together:

• Book value is what remains on the books: cost − accumulated depreciation, trending down toward the salvage value.
• Salvage value is the estimated worth at the end of the useful life, and it is never depreciated below.

The Depreciation calculator builds a full year-by-year schedule and book-value curve. It deliberately covers only these book methods — not MACRS or other tax-specific systems, which are governed by IRS rules and belong with a tax professional.

Currency conversion with a rate you enter

Converting money between currencies is one multiplication once you have a rate:

• Converted amount — amount × exchange rate.
• Inverse — to go the other way, amount / rate.

The Currency calculator uses a rate you enter yourself. That keeps it fully private and usable offline, and it lets you plug in the exact rate your bank or card actually charged — which usually includes a spread over the headline “mid-market” rate you see quoted online.

Net worth — the personal-finance scoreboard

Of every number here, net worth is the one worth tracking over time. It is defined simply:

• Net worth = total assets − total liabilities.
• Assets are what you own: cash, investment and retirement accounts, property, vehicles.
• Liabilities are what you owe: mortgages, student and auto loans, credit-card balances.

A few things make it useful in practice:

• It can be negative early on — common with a fresh mortgage or student debt — and that is normal.
• The trend matters far more than any single snapshot; a rising line means the whole picture is improving.
• Grouping by category shows where the movement comes from, whether that is paying down debt or growing investments.

The Net Worth calculator breaks the total down by category and works as a natural hub for the other tools — it is the one figure that folds every other calculation into a single measure of financial progress.

This is general educational information, not personalized financial, tax or investment advice. For decisions specific to your situation, check with a qualified professional.