FilesCalcs

Margin calculator

Put in what something costs you and what you sell it for, and see your margin, markup and profit. Or start from a target margin to get a price.

Worked out in your browser. Nothing is sent anywhere.

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Example figures. Type your own and it updates as you go.

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How to use the margin calculator

  1. Choose "Cost and price" or "Cost and target margin".
  2. Type the cost of the item or job.
  3. Type the selling price, or the margin you want to hit.
  4. Read the margin %, markup % and profit, or the selling price you need.

Margin vs markup, with an example

Both compare profit with a price, but against different numbers. Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost.

Say you buy a jacket for £60 and sell it for £100. Profit is £40. Margin is 40 / 100 = 40%. Markup is 40 / 60 = 66.7%. Same jacket, same £40, two different percentages.

Margin can never reach 100%, because the profit would have to be the whole price and the item would have cost nothing. Markup has no ceiling: sell something that cost £5 for £20 and that is a 300% markup but a 75% margin.

How to price for a target margin

Divide the cost by 1 minus the margin as a decimal. For a 40% margin on a £60 cost: £60 / 0.6 = £100.

The common mistake is adding the margin percentage to the cost. £60 x 1.4 = £84 looks like "40% on top", but the profit is £24 and £24 / £84 is only a 28.6% margin. That gap is why a business can think it is running at 40% and find the accounts show much less.

Converting between margin and markup

  • Margin from markup: markup / (1 + markup). A 50% markup gives 0.5 / 1.5 = 33.3% margin.
  • Markup from margin: margin / (1 - margin). A 20% margin needs 0.2 / 0.8 = 25% markup.
  • A 100% markup (doubling the cost) is a 50% margin.

If you are VAT registered, work margins on prices without VAT, since the VAT is not yours to keep. The profit margin calculator on this site can strip VAT out first.

Questions people ask

How do I calculate margin?

Subtract the cost from the selling price, divide by the selling price and multiply by 100. Selling at £50 with a £35 cost is a £15 profit and a 30% margin.

Is a 50% markup a 50% margin?

No. A 50% markup on a £10 cost gives a £15 price and £5 profit, which is a 33.3% margin.

What is a good gross margin?

It depends heavily on the trade. Supermarkets often work on thin margins, while software and services can run much higher, so compare with businesses like yours.

What price gives me a 30% margin?

Divide your cost by 0.7. A £70 cost needs a £100 price for a 30% margin.