Finance tool

Margin & Markup Calculator

Work out gross margin, markup and selling price from cost — with or without VAT — and see the markup you need for any target margin.

Leave at 0 if your prices are quoted without tax.

Adds the units needed to cover fixed costs.

RESULT

Enter a cost and a price or percentage to see margin, markup and VAT.

USING THIS TOOL

How the Margin & Markup Calculator helps

Pricing mistakes usually come from mixing up margin and markup. Margin is profit as a share of the selling price; markup is profit as a share of cost. A 50% markup is only a 33.3% margin. This calculator solves in four directions — from cost and price, from cost and a target margin, from cost and a markup, or backwards from a fixed shelf price to the highest cost you can accept — and keeps VAT out of the margin, as accountants do.

Formulas

Gross profit = net selling price − unit cost. Gross margin = gross profit ÷ net selling price. Markup = gross profit ÷ unit cost. Price for a target margin = cost ÷ (1 − margin). Markup needed for a margin = margin ÷ (1 − margin). If the selling price includes VAT, the calculator first removes it: net price = gross price ÷ (1 + VAT rate).

Example

A product costs €40 and sells for €75 including 25% VAT. The net price is €60, VAT is €15, gross profit is €20, the gross margin is 33.33% and the markup is 50%. To reach a 40% margin at the same cost you would need a net price of €66.67 (€83.33 including VAT).

Frequently asked questions

What is the difference between margin and markup?

Both use the same profit figure. Margin divides it by the selling price, markup divides it by the cost. Margin can never reach 100%; markup can be any positive number.

Should VAT be included when calculating margin?

No. VAT is collected for the tax authority, so margin is calculated on the price excluding VAT. Enter the VAT rate and choose whether your price includes it, and the calculator separates it for you.

What markup do I need for a 30% margin?

A 42.86% markup. The general formula is markup = margin ÷ (1 − margin), and the result panel includes a table for common margins.

Know the limits

Results are per unit and exclude shipping, payment fees, returns and overheads unless you include them in the unit cost. Use the break-even calculator for fixed costs over a period.