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Margin calculator: profit margin, markup and selling price

Enter any two values, at least one of them an amount: the rest is worked out. The two values you typed are highlighted; clear a box to have it calculated instead.

Markup or margin?

Markup = profit ÷ cost × 100: profit measured against what you paid.

Margin = profit ÷ selling price × 100: profit measured against what you charge.

Bought for 60, sold for 100: the same profit of 40, but a 66.67% markup and a 40% margin.

What price gives me a target margin?

Based on the cost price above.

Common targets

Discount on the selling price

How a discount eats into your profit, using the prices above.

Margin, markup and multiplier at a glance

MarginMarkupMultiplier

Plain arithmetic done in your browser; nothing is sent anywhere. This is not accounting or tax advice.

Profit margin and markup from any two figures

This calculator links six figures that every seller juggles: cost price, selling price, profit, markup, margin and multiplier. Type any two of them, at least one an amount, and the other four appear with the working shown in your own numbers. Prices are shown in US dollars by default; pounds sterling and euros are in the "Currency" list. Everything runs in your browser and nothing is uploaded.

How to use it

  1. Fill in two of "Cost price", "Selling price (before tax)", "Profit per unit", "Markup (%)", "Margin (%)" and "Multiplier". The two values you typed are highlighted. A cost you have typed stays fixed until you clear its box.
  2. Tick "Add sales tax or VAT" to see the price including tax. The 20%, 5% and 0% buttons are UK VAT rates; type any other rate, such as your state sales tax, into "Other rate (%)".
  3. "What price gives me a target margin?" gives the price to charge for a chosen margin or markup. "Discount (%)" shows how much profit a discount costs you.
  4. Tick "Work out the break-even point" and enter your "Fixed costs for the period". "Copy a link to this calculation" builds an address that reopens the page with the same figures.

The formulas

Use prices before tax throughout. Take an item that costs $40 and sells for $64:

  • Profit = selling price − cost = 64 − 40 = $24.
  • Markup = profit ÷ cost × 100 = 24 ÷ 40 × 100 = 60%.
  • Margin (gross profit margin) = profit ÷ selling price × 100 = 24 ÷ 64 × 100 = 37.5%.
  • Multiplier = selling price ÷ cost = 64 ÷ 40 = 1.6.

Markup vs margin: the mix-up that costs money

Both percentages start from the same profit but divide it by different numbers. Markup compares profit with what you paid; margin compares it with what the customer pays. Margin is therefore always the smaller figure, and it can never reach 100%.

MultiplierMarkupMargin
1.2525%20%
1.550%33.33%
2100%50%
3200%66.67%

The multiplier ties them together: multiplier = 1 + markup ÷ 100 = 1 ÷ (1 − margin ÷ 100). "Keystone pricing" in retail simply means a multiplier of 2: a 100% markup and a 50% margin.

Adding tax

Margins are worked out on prices before tax, because the tax you collect is passed on to the government. The general formula is: price including tax = price before tax × (1 + tax rate). With 20% UK VAT, $64 becomes $76.80. With an 8.25% sales tax it becomes $69.28. In the US, sales tax is usually added at the till rather than shown on the shelf. The preset rates are only examples: check the one that applies to you.

Setting a selling price

To hit a target margin, divide: price = cost ÷ (1 − margin). An item costing $50 with a 30% margin target sells for 50 ÷ 0.7 = $71.43. The common mistake is 50 × 1.3 = $65, which is a 30% markup and only a 23.08% margin. To hit a target markup, multiply: a $80 cost with a 25% markup gives $100.

Discounts and margin

A discount comes off the price but is paid entirely out of profit. An item bought for $60 and sold for $100 earns $40. At 10% off it sells for $90, profit drops to $30 and the margin falls from 40% to 33.33%. To make the same total profit you would need to sell 33.33% more units, a figure the tool shows under the discount.

Break-even point

The simple break-even point tells you how many units cover your fixed costs: units = fixed costs ÷ profit per unit. With $10,000 of fixed costs and $40 profit per unit, you need to sell 250 units, or $25,000 of sales at $100 each. It assumes a steady price and cost and is not a substitute for advice from an accountant.

Frequently asked questions

Why is a 100% margin rejected?

Because profit would equal the selling price, meaning the item cost nothing. The tool explains this and points you to markup, which can go above 100%.

Should I quote markup or margin?

Retailers and investors usually talk about margin; many trades price jobs with a markup on cost. Whichever you use, say which one it is.

Do I include sales tax or VAT in the margin?

No. If you charge tax, work out profit and margin on prices before tax; the tax-inclusive price is only what the customer sees.

Is margin the same as net profit?

No. This is gross margin: price minus the cost of the item. Net profit also deducts rent, wages and other overheads.