Free tool
Profit Margin Calculator
Find your profit, margin and markup from cost and selling price, or work out the price you need to hit a target margin.
Margin and markup
Margin is profit as a share of the selling price: (price − cost) ÷ price. Markup is profit as a share of the cost: (price − cost) ÷ cost. They describe the same profit in two ways, and mixing them up is a common reason prices come out too low.
Example
An item that costs 60 and sells for 100 makes a profit of 40. The margin is 40% (40 ÷ 100) and the markup is 66.7% (40 ÷ 60).
Pricing for a target margin
To hit a target margin, divide the cost by (1 − margin). For a 40% margin on a cost of 60, the price is 60 ÷ 0.6 = 100. Adding 40% to the cost instead gives 84, which is only a 28.6% margin.
Work out margin on prices before VAT, since VAT is collected for the tax authority and is not your income.
FAQ
Questions, answered
What is the difference between margin and markup?
Margin is profit divided by the selling price. Markup is profit divided by the cost. A 50% markup is a 33.3% margin.
How do I calculate the price for a 30% margin?
Divide the cost by 0.7. For a cost of 70, the price is 100, which gives a profit of 30 and a 30% margin.
Should I include VAT?
No. Use prices and costs before VAT, because VAT is passed on to the tax authority.
Is this tool free?
Yes. It runs in your browser and nothing you type is sent to us.
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