Profit margin calculator: margin and markup
From a cost price and a selling price, see the profit per unit, the margin on the selling price, the markup on cost and the price multiplier.
Your profit per unit
£20.00
margin 33.3% · markup 50%
- Profit margin
- 33.3%
- Markup
- 50.0%
- Multiplier
- 1.5
How we calculated it
Margin = profit ÷ selling price · Markup = profit ÷ cost price
£20.00 ÷ £60.00 = 33.3% · £20.00 ÷ £40.00 = 50%
Margin and markup describe the same profit from two different angles, and mixing them up is a classic pricing mistake. A product bought for 40 and sold for 60 earns 20: that is a 50% markup on cost, but only a 33.3% margin on the selling price.
This page gives both, along with the multiplier that turns a cost into a price. Enter prices excluding VAT: VAT is collected for the tax authority and is not part of your margin.
How to use it
- Enter the cost priceWhat one unit costs you, excluding VAT: purchase price, or production cost if you make it yourself.
- Enter the selling priceThe price you charge, excluding VAT.
- Read margin and markupThe profit per unit, the margin, the markup and the multiplier update instantly, with both formulas applied to your figures.
Margin versus markup
- Profit = selling price − cost price.
- Profit margin = profit ÷ selling price × 100. It tells you what share of each sale you keep.
- Markup = profit ÷ cost price × 100. It tells you how much you add on top of the cost.
With a cost of 40 and a price of 60: profit 20, margin 20 ÷ 60 = 33.3%, markup 20 ÷ 40 = 50%. Margin is always lower than markup, and can never reach 100%.
Setting a price from a target margin
To reach a given margin, divide the cost by (1 − target margin). For a 40% margin on a cost of 25: 25 ÷ 0.60 = 41.67. Adding 40% to the cost would only give 35, a margin of 28.6%. This is the error the distinction protects you from.
The multiplier, selling price ÷ cost, is what many retailers use: 1.5 means a 50% markup and a 33.3% margin.
What the margin does not include
This is a gross margin per unit: it does not account for overheads such as rent, salaries or marketing. To know how many units you need to sell to cover those, use the break-even calculator.