Profit margin calculator
Margin and markup come from the same two numbers and are not the same size. Here you get both at once, which is the only way to stop confusing them.
Your figures
Result
- Cost$6060.0%
- Profit$4040.0%
- Profit per unit
- $40.00
- Equivalent markup
- 66.67%
- You multiply cost by
- 1.667
Breakdown of one sale
| Item | Amount | Of the price |
|---|---|---|
| Cost | $60.00 | 60.0% |
| Profit | $40.00 | 40.0% |
| Selling price | $100.00 | 100.0% |
What we assume
- Margin is measured against the selling price; markup against the cost.
- Cost means the full unit cost: product, shipping, packaging and fees.
- Figures are excluding sales tax. That money is not yours.
- This is per-unit margin, not business profitability: fixed costs are not in it.
How it is calculated
Profit is the usual subtraction:
profit = selling price − cost
And from there come two different percentages, depending on what you divide by:
margin (%) = profit / selling price × 100
markup (%) = profit / cost × 100
The confusion that costs money
You sell something for £100 that costs you £60. You make £40. What is your margin? It depends what you compare it with: 40 against 100 is a 40% margin, and 40 against 60 is a 66.7% markup. Same pound, two numbers.
The expensive mistake runs the other way: wanting a 30% margin and adding 30% to the cost. At a cost of £60 that gives a price of £78, and the real margin is 23%, not 30. Seven points gone from every sale without noticing.
For a target margin, the formula is this:
price = cost / (1 − target margin)
At £60 cost and a 30% margin: 60 / 0.7 = £85.71.
What belongs in the cost
Everything that disappears with that particular unit: the product, shipping if you pay it, packaging, and the platform fee, which on a marketplace takes between 8 and 20%. Leaving the fee out is the number one reason margins look healthy and are not.
What does not go here is rent, your salary or software: those are fixed costs and do not change when you sell one more unit. They are covered by the margin, not subtracted from it.
An example
You sell for £100 a product that costs you £60. You make £40 per unit: a 40% margin and a 66.67% markup. You are multiplying cost by 1.667.
Frequently asked questions
Which of the two percentages should I use?
Margin, nearly always. It is what appears on a profit and loss account and what lets you compare products with each other and with competitors. Markup is convenient for pricing quickly on the shop floor, but as a business metric it falls short and always sounds better than it is.
What counts as a good margin?
It depends enormously on the sector: grocery runs at 2-5%, clothing at 40-60%, and software above 80%. The only margin that matters is one that covers your fixed costs and leaves something over, so compare with yourself before comparing with anyone else.
Does sales tax go into the calculation?
No. The tax you charge is not your income, you collect it on behalf of the government. Always work with tax-exclusive figures, or the margin will be inflated by exactly the tax rate.
Can I have a margin above 100%?
No. Margin is a share of the selling price, so its ceiling is 100%, which would mean zero cost. Markup can exceed 100% and has no limit: buy at 10 and sell at 50 and the markup is 400%.
Keep calculating
All tools →- Markup calculator Put a percentage on your cost and out comes the price. And next to it, the margin you actually keep, which is always smaller and almost nobody works out.
- Sales commission calculator Base pay, percentage, and the threshold where it starts counting. With the effective percentage at the end, which is the only way to compare two offers.
- VAT calculator Add VAT to a price, or strip it out of one that already includes it. With the net and tax split, which is what an invoice needs.
- Stacked discount calculator 50% and then an extra 20% is not 70%. Here you see the real final price and the single discount you are actually being given.
Updated on 2026-09-10. Calculations run in your browser; nothing you type is sent to a server.