LEARN · GUIDE
Your real break-even is not the price.
A 50¢ contract does not need the event to happen half the time. It needs it to happen slightly more often than that, because the fee and the spread are paid whether you are right or wrong. The gap is small in cents and large relative to most edges, and it is the most common arithmetic error on a prediction market.
The three components
A contract you buy at price p returns $1 if the event happens. Your break-even probability is the share of the time it must happen for you to end level. Before costs that is exactly p — which is why the price is so often read as the market's probability, and why the reading is very nearly right.
Two costs sit on top. The first is Kalshi's taker fee: 0.07 × p × (1 − p) per contract, charged when you take liquidity, peaking at 1.75¢ on a 50¢ contract and falling toward the extremes. The second is the spread you cross to get filled — if the book is 49 bid, 51 ask, buying at 51 pays a cent over the midpoint. Both are paid at entry, on every contract, regardless of outcome.
The table
Break-even including the taker fee, then including a crossed one-cent spread as well. The last column is the number a taker actually has to beat.
| PRICE | FEE | BREAK-EVEN | +1¢ SPREAD |
|---|---|---|---|
| 10¢ | 0.63¢ | 10.6% | 11.6% |
| 25¢ | 1.31¢ | 26.3% | 27.3% |
| 40¢ | 1.68¢ | 41.7% | 42.7% |
| 50¢ | 1.75¢ | 51.8% | 52.8% |
| 60¢ | 1.68¢ | 61.7% | 62.7% |
| 75¢ | 1.31¢ | 76.3% | 77.3% |
| 90¢ | 0.63¢ | 90.6% | 91.6% |
Why the middle of the book is the expensive place
The fee tracks p × (1 − p), which is largest when the outcome is most uncertain. A coin-flip contract carries the peak fee precisely because nobody knows what happens. That is defensible as a fee schedule and awkward as a trading environment, because the middle of the book is also where genuine edges are hardest to find: a market at 50¢ is one the crowd has no strong opinion about, and disagreeing with a crowd that has no opinion is not obviously easier than disagreeing with one that does.
Put the two together and the fee is largest, in points of probability, exactly where the edge it is eating is smallest. A three-point edge at 50¢ pays 1.75¢ of fee — over half the edge — before the spread. The same trade at 90¢ pays 0.63¢, but a three-point edge at 90¢ is a much stronger claim to be making about a near-certainty.
Exiting early costs a second time
The fee is charged on the trade, not on the outcome. Holding to settlement pays it once. Selling early — to take a profit, to cut a loss, or because the thesis changed — is a second trade and carries its own fee, computed at the price you exit rather than the price you entered.
That has a straightforward consequence for anyone planning to trade in and out of a position rather than hold it: the round trip has to clear roughly twice the fee plus the spread on both sides. A strategy that looks marginally profitable held to settlement can be reliably unprofitable traded actively, with nothing about the underlying view having changed.
Making rather than taking
Resting a limit order inside the spread rather than crossing it changes both costs at once: makers pay a quarter of the taker fee, and a filled resting order captures the spread instead of paying it. The price of that is uncertainty — a resting order fills when someone chooses to trade against it, which may be never, and the fills you do get are disproportionately the ones where the other side had a reason. Execution mechanics are covered in order types and execution.
QUESTIONS
Is the price the same as the break-even probability?
No. The price is the break-even before costs. The taker fee raises it, and crossing the spread to get filled raises it again. A 50 cent contract taken at the offer needs closer to 52 percent than 50.
Where is the fee worst relative to the edge?
In the middle of the book. The fee formula peaks at 50 cents, and mid-priced contracts are also where edges tend to be thinnest, so the fee eats the largest share of the thinnest advantage exactly where most volume trades.
Do I pay a fee twice if I sell before settlement?
Selling early is another trade, so it carries its own fee. Holding a contract to settlement does not incur a second trading fee to get there.
How much does the spread cost?
Crossing a one cent spread costs half a cent against the midpoint, which is roughly a third of the peak fee. On wider books it dominates the fee entirely.