Profit Margin and Markup Calculator
- No invented stats
- Written for UK readers
- Published 30 September 2026
Margin and markup are worked out from exactly the same two numbers, and they are not the same figure — a 50% markup is a 33.3% margin. Mixing them up is one of the quickest ways to underprice a deal. This calculator shows both from your cost and price, and will price back from a target margin. It runs entirely in your browser, so nothing you enter is sent anywhere.
How this works
Both figures start with the same gross profit: selling price minus cost. The only difference is what you divide it by.
- Margin = (price − cost) ÷ price. The share of the money coming in that you keep. It can never reach 100%.
- Markup = (price − cost) ÷ cost. How much you added on top of what you paid. It has no upper limit — a £10 item sold at £50 is a 400% markup.
Margin is the figure that matters when you are looking at the business: it is what appears in your accounts, it is what discounts eat into, and it is what you compare across products. Markup is the figure you use when you are setting a price from a cost, because it is a multiplier you can apply directly.
To go the other way and price from a target margin, divide the cost by one minus the margin: price = cost ÷ (1 − margin). This is where people go wrong most often. If you want a 40% margin, you do not add 40% to the cost — that only gets you a 28.6% margin. You divide by 0.60, which is the same as adding a 66.7% markup.
A worked example
You buy something for £60 and sell it for £100. The gross profit is £40 either way.
- Margin: £40 ÷ £100 = 40%
- Markup: £40 ÷ £60 = 66.7%
Now say you want a 45% margin on that same £60 cost. Price = £60 ÷ (1 − 0.45) = £60 ÷ 0.55 = £109.09. Check it: the profit is £49.09, and £49.09 ÷ £109.09 = 45%. The equivalent markup is £49.09 ÷ £60 = 81.8%.
The gap between the two figures widens as they get bigger, which is why the confusion gets expensive at the top end. A 25% markup is a 20% margin. A 50% markup is a 33.3% margin. A 100% markup — doubling your money — is a 50% margin. If someone tells you they work on "50%", it is worth asking which one they mean.
What this doesn't account for
- This is gross, not net. Overheads, salaries, marketing and finance costs all come out of the margin afterwards.
- What counts as cost. The answer is only as good as the cost you enter. Delivery, payment processing fees, returns and support time are easy to leave out and are often the difference between a good margin and a thin one.
- VAT. Always use figures excluding VAT. VAT is not yours, so it never belongs in a margin calculation.
- Averages. A blended margin across a product range can hide items that are losing money.
Once you know your real margin, the discount impact calculator shows what a price cut does to it, the break-even calculator turns it into a sales target, and negotiating without discounting covers how to protect it in the conversation.
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