Margin & markup calculator
Profit, margin and markup from cost and price, or the price you need for a target margin.
Profit
£20.00
Margin 33.33% · markup 50%
- Cost
- £40.00
- Price
- £60.00
- Profit
- £20.00
- Margin
- 33.33%
- Markup
- 50%
Show workings
- Profit£60.00 − £40.00 = £20.00
- Margin£20.00 ÷ £60.00 = 33.33%
- Markup£20.00 ÷ £40.00 = 50%
How it works
Profit = selling price − cost.
Margin is profit as a share of the selling price: profit ÷ price. Markup is profit as a share of the cost: profit ÷ cost. They describe the same profit, so markup is always the bigger number.
To hit a target margin, price = cost ÷ (1 − margin). Adding the margin percentage to the cost (a markup) falls short.
Worked example
Buy for £40, sell for £60: profit £20, margin £20 ÷ £60 = 33.3%, markup £20 ÷ £40 = 50%. For a 40% margin on a £40 cost you'd need £40 ÷ 0.6 = £66.67.
Questions
What is the difference between margin and markup?
Same profit, different base. Margin divides by the selling price, markup by the cost. A 50% markup is a 33.3% margin; a 50% margin is a 100% markup.
Should I include VAT?
Use prices without VAT if you're VAT-registered, since the VAT isn't yours to keep. Use the VAT calculator to remove it first.
What is a good profit margin?
It varies by industry: supermarkets run on a few percent, while software or services can be far higher. Compare with businesses like yours, and remember overheads come out of gross margin.