Retail pricing
- Input
- Cost £40, price £100
- Output
- Margin 60% · markup 150%
The same £60 profit. Describing it as a 150% markup sounds far better than 60% margin, which is why the two are confused so often.
Profit Margin Calculator
A profit margin calculator converts cost and price into the percentages a business runs on. The reason it matters that both are shown is that margin and markup are constantly mistaken for one another: a supplier quoting a 50% markup is offering a 33% margin, and pricing a product as though those are the same erodes profit on every unit sold.
Runs entirely in your browser — your figures are never uploaded.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. An item costing £40 and sold for £100 carries a 60% margin but a 150% markup. Quoting markup as margin overstates profitability substantially.
£
£
Excluding sales tax
Profit margin
60.0%
Share of the selling price you keep
Markup
150.0%
How much you added to cost
- Profit per unit
- £60
- Cost as a share of price
- 40.0%
- Cost — 40%
- Profit — 60%
The same £60 profit is a 60.0% margin but a 150.0% markup. Quoting markup as margin is the most common pricing error in small business.
%
To achieve a 50% margin on a £40 cost, price at £80 — a markup of 100.0%.
The maths
Profit Margin Calculator formula
Formula
Margin % = (Profit / Revenue) × 100 · Markup % = (Profit / Cost) × 100
- Profit
- Revenue minus cost
- Revenue
- Selling price
- Cost
- What the item cost you
Worked example
An item costing £40, sold for £100
Inputs
- Cost
- £40
- Selling price
- £100
Working
- Profit = 100 − 40 = £60
- Margin = (60 ÷ 100) × 100 = 60%
- Markup = (60 ÷ 40) × 100 = 150%
60% margin, 150% markup — the same £60 profit described two ways.
How to
How to use the Profit Margin Calculator
- 1
Enter your cost
Put in what the item costs you, including anything variable that scales per unit — materials, packaging, payment fees.
- 2
Enter the selling price
Put in what the customer pays, excluding sales tax. Including tax overstates both margin and markup.
- 3
Read both percentages
Margin is the share of the price you keep; markup is how much you added to cost. Markup is always the larger number.
- 4
Work backwards if needed
Enter a target margin instead to find the price you must charge to achieve it.
Reference
Markup needed for a given margin
| Target margin | Required markup | Price on £100 cost |
|---|---|---|
| 10% | 11.1% | £111 |
| 20% | 25.0% | £125 |
| 30% | 42.9% | £143 |
| 40% | 66.7% | £167 |
| 50% | 100.0% | £200 |
| 60% | 150.0% | £250 |
Examples
Profit Margin Calculator examples
The 50% trap
- Input
- Cost £50, markup 50%
- Output
- Price £75 · margin 33.3%
Applying a 50% markup does not give a 50% margin. Businesses that conflate them consistently price too low.
Target margin
- Input
- Cost £40, target margin 50%
- Output
- Price £80
To achieve a 50% margin the price must be double the cost, which corresponds to a 100% markup.
Why use it
What the Profit Margin Calculator gives you
Both numbers, always
Showing margin and markup together removes the single most common pricing error in small business.
Reverse pricing
Enter the margin you need and get the price, rather than guessing a markup and discovering the margin afterwards.
A conversion table
The reference table maps target margins to the markup required, which is the lookup most pricing decisions actually need.
Private
Cost and pricing data never leaves your browser.
Good to know
Profit Margin Calculator limitations
- This is gross margin only. Overheads, salaries and rent are not deducted, so net margin will be lower.
- Assumes a single unit. Volume discounts, returns and shrinkage all change the realised margin.
- Sales tax must be excluded from the price, or both percentages will be overstated.
- Does not account for the cost of holding stock, which matters for slow-moving inventory.
Summary
Profit Margin Calculator in short
- Margin = profit ÷ price. Markup = profit ÷ cost.
- A 60% margin is a 150% markup — the same profit, two descriptions.
- A 50% markup gives only a 33.3% margin.
- To hit a 50% margin, price at double the cost.
- Markup is always the larger of the two percentages.
FAQ
Profit Margin Calculator questions
How do I convert a markup percentage into a margin?
Margin measures profit against the selling price; markup measures it against cost. On an item costing £40 sold at £100, the margin is 60% and the markup 150%. Markup is always larger for a profitable sale.
Which should I use for pricing?
Use markup to set the price from a known cost, and margin to judge profitability and compare with competitors or industry benchmarks. Financial statements report margin, not markup.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup), with both as decimals. A 50% markup gives 0.5 ÷ 1.5 = 0.333, so a 33.3% margin. To go the other way, markup = margin ÷ (1 − margin).
What is a good profit margin?
It varies enormously by sector. Grocery retail runs on 1–3% net, software often exceeds 70% gross, and restaurants typically sit at 3–9% net. Compare only against your own industry.
Is this gross or net margin?
Gross. It covers direct costs only. Net margin additionally deducts overheads, salaries, rent, marketing and tax, and is always lower — often substantially.
Can margin exceed 100%?
No. Margin is profit as a share of price, so it approaches but never reaches 100%, which would mean zero cost. Markup has no such ceiling and can be many hundred per cent.
What if I sell below cost?
Both figures turn negative. Selling a £40 item for £30 gives a −33.3% margin and a −25% markup. This is a loss leader, sometimes deliberate, but it must be intentional rather than accidental.
Should VAT or sales tax be included in the price?
No. Tax is collected on behalf of the government and is not revenue, so including it inflates both percentages. Use the price excluding tax on both sides.
Is my cost data sent anywhere?
No. The arithmetic runs in your browser. Supplier costs and pricing strategy are commercially sensitive, and neither is transmitted, stored or logged.
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