Profit margin calculator
Profit Margin Calculator
Calculate your gross profit, profit margin, markup and target selling price. Switch between modes to find margin, price or markup.
40.00%
Formulas
Margin & markup
grossProfit = sellingPrice − cost
margin% = grossProfit ÷ sellingPrice × 100
markup% = grossProfit ÷ cost × 100
Selling price from a target
price = cost ÷ (1 − margin ÷ 100)
price = cost × (1 + markup ÷ 100)
Margin vs markup
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. Confusing them is the fastest way to under-price. A 40% margin is a 66.67% markup — same money, different denominator. See the full markup vs margin guide for a step-by-step walkthrough.
| Cost | Selling price | Gross profit | Margin | Markup |
|---|---|---|---|---|
| £10.00 | £12.50 | £2.50 | 20.00% | 25.00% |
| £20.00 | £30.00 | £10.00 | 33.33% | 50.00% |
| £30.00 | £50.00 | £20.00 | 40.00% | 66.67% |
| £40.00 | £80.00 | £40.00 | 50.00% | 100.00% |
| £25.00 | £100.00 | £75.00 | 75.00% | 300.00% |
UK pricing examples
Product — £30 cost, £50 price
Service — £80/hr cost, 50% target margin
Reseller — £30 cost, 50% target markup
Retail — £8 cost, 60% target margin
Ecommerce — £15 cost, 45% target margin
Consultant — £200 cost, 70% target margin
How margin relates to break-even
Your gross margin is the fuel that pays fixed costs. The higher the margin, the fewer units you need to sell to break even. If your fixed costs are £4,000 a month and your gross margin per unit is £20, you need 200 units a month to break even (£4,000 ÷ £20). Halve the margin to £10 and you need 400 units. Run the numbers in the Break-even Calculator — or read the UK business pricing guide.
Common pricing mistakes
- Including VAT in cost or price — always work in net figures.
- Forgetting variable costs like payment processing, packaging and platform fees when setting price.
- Treating a target markup as if it were a target margin.
Questions
What is profit margin?
Profit margin is gross profit as a percentage of selling price. For example, if you sell something for £50 and it costs you £30, the £20 profit is 40% of the £50 price.What is markup?
Markup is gross profit as a percentage of cost. The same £20 profit on a £30 cost is a 66.67% markup.What is the difference between margin and markup?
Margin uses selling price as the denominator; markup uses cost. The same profit will always look like a smaller percentage as margin than as markup.How do I calculate selling price from target margin?
Divide your cost by (1 − target margin / 100). For example, a £30 cost with a 40% target margin gives a £50 selling price.Why is my margin lower than my markup?
Margin uses a larger denominator (selling price) than markup (cost), so the same profit is always a smaller percentage when expressed as margin.Should I include VAT in profit margin calculations?
Use net (ex-VAT) figures for both cost and selling price. VAT is collected on behalf of HMRC — it is not your revenue or your cost.