Find margin and markup from cost and price, or work out the selling price you need for a target margin or markup.

How to use the profit margin calculator

Choose what you already know: cost and selling price, cost and a target margin, or cost and a markup.
Enter the figures in any one currency.
Read the margin, markup, profit and selling price.

Margin and markup are not the same

Both describe the same profit, measured against different amounts. Margin divides the profit by the selling price. Markup divides it by the cost. An item that costs 60 and sells for 100 makes 40 profit: that is a 40% margin but a 66.67% markup.

Mixing the two up is a common pricing mistake. Adding a 40% markup to a cost does not give a 40% margin, so prices end up lower than intended.

Markup	Same sale as a margin
25%	20%
50%	33.33%
66.67%	40%
100%	50%

Formula

Profit = price − cost
Margin = profit ÷ price × 100
Markup = profit ÷ cost × 100
Price from margin = cost ÷ (1 − margin ÷ 100)
Price from markup = cost × (1 + markup ÷ 100)

Worked examples

An item costing 60 and selling for 100 makes 40 profit: a 40% margin and a 66.67% markup.

To make a 40% margin on a cost of 60, sell at 60 ÷ (1 − 0.40) = 100. A 50% markup on the same cost gives a price of 90, which is a 33.33% margin.

A product costs 25. For a 30% margin, the price is 25 ÷ 0.70 = 35.71, a profit of 10.71 and a 42.86% markup. Adding a 30% markup instead gives 32.50, which is only a 23.08% margin.

What to include in cost

For gross margin, use the direct cost of each item: the purchase price, or materials and production, plus delivery to you. For net margin, also share out overheads such as rent, salaries, software and advertising.

Gross margin shows whether each sale is priced well. Net margin shows whether the business as a whole makes money. A healthy gross margin can still leave a loss once overheads are paid.

How discounts affect margin

A discount comes straight out of your profit, so it cuts the margin by more than it seems. Take the item that costs 60 and sells for 100. A 10% discount brings the price to 90 and the profit from 40 to 30, so the margin falls from 40% to 33.33%.

To earn the same total profit at the lower price, you would need to sell 40 ÷ 30 = 1.33 times as many items, a third more. Check the new margin here before agreeing a discount or running a sale.

Frequently asked questions

What is the difference between margin and markup?

Margin is profit as a share of the selling price. Markup is profit as a share of the cost. The same sale always has a higher markup than margin.

How do I convert markup to margin?

Margin = markup ÷ (100 + markup) × 100. A 50% markup is 50 ÷ 150 × 100 = a 33.33% margin.

What is a good profit margin?

There is no single answer. It depends on the industry, how quickly stock sells and how high your overheads are. Compare with similar businesses, and make sure your gross margin covers overheads with something left over.

Can margin be 100% or more?

No. Margin is a share of the price, so it is always under 100%. Markup has no upper limit.

Should prices include VAT or sales tax?

Use prices before tax. Tax collected from customers is passed on to the government, so it is not part of your profit.

Should cost include overheads?

For gross margin, use the direct cost of the item. Include overheads if you want net margin.

Profit Margin & Markup Calculator