Operator Toolsby Hallett's Cove Partners

Profit Margin & Markup Calculator

Free

Convert between margin and markup, and price every job with profit baked in.

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What is the Profit Margin & Markup Calculator?

Margin and markup are two ways of describing the same thing — profit on a sale — but they're not the same number. A 50% markup is only a 33% margin. Mixing them up is one of the most common reasons small businesses think they're profitable when they're not.

This calculator does the conversion for you and, given any cost and target margin (or markup), gives you the price to charge. It also accounts for VAT/sales tax if you want to see the inclusive price.

When to use it

  • Setting a price for a new product or service.
  • Reviewing whether your current prices hit your target margin.
  • Quoting a one-off job — start from cost and add the margin you need.
  • Translating between a supplier's markup pitch and your real margin.

The formula

Margin = profit ÷ price. Markup = profit ÷ cost. So if you buy something for €60 and sell it for €100, your profit is €40, your margin is 40%, but your markup is 67%. To go from a target margin to a price, divide cost by (1 − margin). To go from markup to margin, divide markup by (1 + markup).

Worked example

Cost per unit
€60.00
Target margin
40%
VAT rate
25%
Result

€100.00 (net) → €125.00 (with VAT)

To hit a 40% margin on a €60 cost item, you need to sell at €100 before tax. That's a 67% markup over cost. Add 25% VAT and the customer pays €125.

How to use it

  1. 1

    Enter your cost (what the item or job costs you to deliver)

  2. 2

    Enter either your target margin OR target markup

    The calculator handles both directions.

  3. 3

    Add a VAT rate if you want a tax-inclusive price

  4. 4

    Read the calculated price and effective margin/markup

  5. 5

    Save the scenario to revisit when your costs change

Common questions

What's the difference between margin and markup?+

Margin is profit as a percentage of price. Markup is profit as a percentage of cost. They describe the same profit, but markup is always a bigger number than margin — sometimes much bigger. A 100% markup is only a 50% margin.

Why do retailers usually quote markup, not margin?+

Markup is easier to apply in your head at the till: just multiply cost by some factor. Margin requires you to know the final price first. In practice you should plan in margin (it's what shows up in your accounts) and price in markup.

Should I aim for a specific margin percentage?+

It depends on the business. Trades, agencies, and consultancies typically aim for 50%+ gross margin. Retail and food service often run on 30–40%. The right target is whatever covers your fixed costs and leaves a healthy net profit at your realistic sales volume.

Does it work for services as well as products?+

Yes — for services, 'cost' is your loaded hourly rate × estimated hours. For a more complete project pricing tool that includes risk buffers and payment fees, see the Project Quote Calculator.

Ready to try it?

Create a free account and run the calculator in the next two minutes.

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