Profit margin and markup calculator

Name: Profit margin calculator
Author: Richard Injante

A clear distinction between margin on price and markup on cost.

Content reviewed by Richard Injante Published by SolucionesAhora.com Updated on 2026-10-08 How we verify

Calculator inputs

Results

Enter your values and press “Calculate” to see the result.

Free, no sign-up! What if you could do this without a calculator? A five-minute game with challenges, lives and points. It clicks even when you cannot be bothered.

In short

What it calculates: A clear distinction between margin on price and markup on cost.
Formula used: Profit = price − cost
Example: Cost £40, price £60:

Profit margin calculator

Margin and markup are constantly confused, and they are not the same: a 50% markup is a 33% margin.

This calculator shows both at once from the cost and the price.

How it works

Gross profit is the difference between price and cost. Divided by the price it gives the margin; divided by the cost it gives the markup.

Formula

Profit = price − cost

Margin % = profit / price × 100

Markup % = profit / cost × 100

Worked example

Cost £40, price £60:

Profit: £20
Margin: 33.33%
Markup: 50%

Explanation

Margin and markup are not the same

This is the mistake that costs retailers most money. Margin is calculated on the selling price; markup on the cost. A product costing 60 and selling for 100 has a forty per cent margin and a sixty-seven per cent markup. Applying a forty per cent markup believing it gives a forty per cent margin sets the price at 84 and the real margin at twenty-eight.

To set prices, think in margin

If you need a specific margin, divide the cost by one minus that margin as a decimal. For a forty per cent margin on a cost of 60, the price is 60 divided by 0.6, that is 100. Multiplying the cost by 1.4 gives a different figure and a different margin.

Gross and net margin

Gross deducts only the cost of the product. Net also deducts rent, wages, payment fees, shipping and returns. A business with a fifty per cent gross margin can have a net margin of five.

Tax excluded

Margin is always calculated on amounts excluding indirect tax. Mixing a tax-inclusive selling price with a tax-exclusive cost artificially inflates the result.

Frequently asked questions

Which one should I use to set prices?

Markup is easier for building a price up from cost; margin is what measures real profitability on sales.

Does margin include tax?

It should not. Always work with tax-exclusive prices so the margin reflects real profit.

How do I price for a specific margin?

Divide the cost by one minus the margin as a decimal. For a forty per cent margin, divide the cost by 0.6.

What is the difference between margin and markup?

Margin is calculated on the selling price and markup on the cost. A sixty-seven per cent markup equals a forty per cent margin.

Need to calculate something else?

These tools are often used alongside this calculator.