Profit Margin Calculator: Margin, Markup and Price
By Hesaplayıcı
The profit margin calculator finds the profit margin and the markup on cost from a cost and a selling price. It also finds the selling price from a cost and a target margin or markup, and the cost from a price and a margin. The margin divides the profit by the price, the markup by the cost.
Worked example: A product that costs 30 and sells for 45
Result
33.33%
- Cost
- 30
- Selling price (before VAT)
- 45
- Profit per unit
- 15
- Profit margin
- 33.33%
- Markup (on cost)
- 50.00%
Step by step
Profit per unit
profit = price − cost
profit = 45.00 − 30.00 = 15
Profit margin
margin = profit / price × 100
margin = 15.00 / 45.00 × 100 = 33.33%
Markup (on cost)
markup = profit / cost × 100
markup = 15.00 / 30.00 × 100 = 50.00%
How to use
- Choose What to calculate: margin and markup from cost and price, price from cost and margin, price from cost and markup, or cost from price and margin.
- Enter the fields the choice shows: Cost, Selling price, Profit margin or Markup. Enter amounts before VAT, in one currency.
- To see the price with VAT, open More options and enter the VAT or sales tax rate.
- Press Calculate. You get the result, the profit per unit, the margin, the markup and the steps.
Formula
profit = price − costmargin = profit / price × 100markup = profit / cost × 100price = cost / (1 − margin / 100), price from a marginprice = cost × (1 + markup / 100), price from a markupcost = price × (1 − margin / 100), cost from a price and a marginVAT = price × VAT rate / 100
The cost is what one unit costs to buy or make. The price is the selling price of one unit before VAT. The profit margin is the profit as a share of the price; the markup is the profit as a percentage of the cost. One converts to the other: markup = margin / (1 − margin), as decimals.
Worked example
The example on this page finds the margin and the markup of a product with a known cost and price. The steps first give the profit per unit, then divide that profit by the price for the margin and by the cost for the markup. Both rates come from the same profit; the markup is the larger one.
Limits
The calculator finds the gross profit of one unit. It leaves out overheads such as rent, wages and shipping, discounts, and income or corporate tax. The margin must be below 100%; the markup must be above −100%. When the price is below the cost, the margin and the markup are negative. VAT is added on top of the price. Results are not rounded; the page shows amounts to 2 decimals.
Frequently Asked Questions
How do you calculate profit margin?
Subtract the cost from the selling price, divide the profit by the selling price and multiply by 100. A product that costs 30 and sells for 45 makes a profit of 15, so the margin is 15 / 45 × 100 = 33.33%.
What is the difference between margin and markup?
The margin divides the profit by the price; the markup divides it by the cost. For one product the markup is always larger: a product bought for 30 and sold for 45 has a 33.33% margin and a 50% markup.
How do I find the price for a target margin?
Divide the cost by 1 minus the margin as a decimal: price = cost / (1 − margin / 100). For a 40% margin on a cost of 94, the price is 94 / 0.6 = 156.67. Adding 40% to the cost gives only a 28.57% margin.
Can a profit margin be 100%?
No. The margin is the profit as a share of the price, and the profit cannot be larger than the price; a 100% margin would mean a cost of zero. A markup has no upper limit: selling at twice the cost is a 100% markup.
Is VAT part of the profit margin?
No. The margin and the markup come from the cost and the price before VAT, because the VAT is not the seller’s income. With a VAT rate, the calculator also shows the VAT and the price with VAT.
Calculation rules
- The profit margin is the profit as a share of the price; the markup is the profit as a share of the cost: margin = profit / price × 100, markup = profit / cost × 100. For one product the markup is always larger than the margin: a 25% margin is a 33.33% markup.
- A margin cannot be 100% or more, because the profit cannot be larger than the price. A markup has no upper limit. When the price is below the cost, the margin and the markup are negative: a loss.
- Enter the cost and the price before VAT. With a VAT rate, the VAT is added on top of the price; the margin and the markup come from the amounts before VAT. The calculator does not round; the page shows amounts to 2 decimals.
- The calculator finds the gross profit of one unit: it leaves out overheads such as rent and wages, and income tax.