Separate the three numbers
Cost is the money spent acquiring a position, including entry fees. Payout is what the contract returns at settlement. Profit is the amount left after subtracting all applicable costs. A large payout is not necessarily a large return.
For ordinary $1 binary settlement, 100 winning contracts pay $100. If their purchase cost was $70 and entry fees were $2, the profit is $28, assuming no other costs. Losing settlement would produce a $72 loss.
Return on cost
In that hypothetical winning case, the return on cost is $28 ÷ $72, or approximately 38.9%. Without the $2 fee, it would be $30 ÷ $70, or approximately 42.9%. The dollar payout did not change, but the economics did.
Always label the denominator and the holding period. This return on cost is for the position’s holding period; it is not an annualized yield. A percentage of contract face value, a return on cash spent, and a change in the market price describe different things.
Break-even probability
If 100 contracts cost $72 in total and the only possible payouts are $100 or $0, the probability needed to break even in expectation is 72%. This follows from q × $100 − $72 = 0.
This simplified calculation assumes a fixed cost, a fixed payout, and holding through ordinary binary settlement. Outcome-dependent charges, rebates, alternative settlement rules, taxes, and the time value of money require a more complete calculation. Your estimated probability can also be wrong.
Fees are product specific
Kalshi’s fee guidance says fees can vary by market and that some executions of resting orders incur maker fees. Polymarket’s international documentation also describes fees that differ across markets. There is no reliable universal “prediction market fee.”
Use the current schedule for the actual venue and product. Include entry and exit charges where applicable, rounding, funding or conversion costs, and third-party transfer charges. A promotion is not a permanent fee schedule.
An early sale has different math
If the same 100 contracts are sold for 80¢ each, gross sale proceeds are $80. Against $72 of acquisition cost, profit is $8 before exit costs. The $100 potential settlement payout is no longer the relevant revenue figure.
Our calculator uses a simple fully paid binary contract model. It is a way to inspect arithmetic, not a venue-specific trade quotation or a prediction of returns.
Fact-check notes
Review completed .
- Clarified that the worked return on cost covers the position’s holding period and is not an annualized yield. The worked cost, profit, and break-even calculations were rechecked.
Sources & further reading
- Kalshi — Fees and links to the current schedule
- Polymarket — Trading fees
- CFTC — Event contract payout fundamentals
Platform terms and rules can change. Check the linked primary sources and the specific contract before relying on a detail. How we work →