Profit Margin Calculator

After product cost, what is left of each sale at this price, and what should the price be to hit a target margin? See your margin from cost and price, or find the selling price — or the highest cost you can pay — for a target margin. The tool separates VAT and makes the most common mistake, treating markup as margin, impossible to miss.

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Inputs

What do you want to calculate?

Calculation

Margin and markup from cost and selling price.

Values

Currency

Unit cost

Purchase or production cost excluding VAT.

Does the price include VAT?

Selling price (incl. VAT)

VAT rate

Enter the rate that applies to your product. Use 0 if there's no VAT.

Result

Profit margin

40%

Markup: 66.7%.

$40 of every 100 in sales is profit

Margin is 40%, markup is 66.7% — $66.67 added for every 100 of cost. This is gross profit; shipping, fees, advertising and fixed costs aren't deducted yet.

Profit margin

40%

Profit ÷ price excl. VAT.

Markup

66.7%

Profit ÷ cost.

Gross profit per unit

$40

Price excl. VAT − cost.

Price excl. VAT

$100

Incl. VAT: $120.

Cost$60Profit$40VAT$20

Markup ↔ margin equivalents

Markup ↔ margin equivalents
Markup	Margin	Price at $100 cost
10%	9.1%	$110
20%	16.7%	$120
25%	20%	$125
30%	23.1%	$130
40%	28.6%	$140
50%	33.3%	$150
66.7% ← you	40%	$166.67
75%	42.9%	$175
100%	50%	$200
150%	60%	$250
200%	66.7%	$300

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Results are estimates based on the values you enter, not investment or financial advice. The calculation runs in your browser and no separate request is made to send your numbers. The values you enter are written into the link in the address bar.

Formula

Profit margin
(Price − Cost) ÷ Price × 100
Price excludes VAT.
Markup
(Price − Cost) ÷ Cost × 100
Price for target margin
Cost ÷ (1 − Target margin)
Price incl. VAT = Price excl. VAT × (1 + VAT rate)
Conversion
Margin = Markup ÷ (1 + Markup)

How to read the result

Margin divides profit by price; markup divides it by cost. For the same product they differ: buy at 600, sell at 1,000, and margin is 40% while markup is 66.7%. In pricing discussions, always be clear which one you mean.

The costliest mistake is adding your target margin on top of cost. Want 40% margin and add 40% to cost, and your real margin is 28.6%. The right price for a target margin is cost ÷ (1 − margin); in 'Find price' mode the tool shows both prices side by side.

Always calculate margin on the price excluding VAT. Use the VAT-inclusive price and you count the tax authority's share as profit. You can enter a VAT-inclusive price; the tool strips VAT out first.

This is gross margin: only product cost is deducted. Shipping, fees, advertising and fixed costs aren't yet. Use the ROAS and break-even calculators to account for them; they tell you whether the gross margin is enough.

'Find cost' mode helps in supplier negotiations: if you know the shelf price and the margin to protect, it gives you the highest purchase cost you can accept.

Frequently asked questions

How do you calculate profit margin?

Subtract cost from price, divide by price and multiply by 100. If a product costs 60 and sells for 100 excluding VAT, profit is 40 and margin is 40 ÷ 100 = 40%.

What is the difference between margin and markup?

Margin divides profit by price; markup divides it by cost. The same 40 profit is a 40% margin on a price of 100 and a 66.7% markup on a cost of 60. Margin can never reach 100%; markup has no ceiling. A 100% markup equals a 50% margin.

If I add 30% to cost, do I get a 30% margin?

No. Adding 30% to cost is a 30% markup, which equals roughly a 23.1% margin. For a 30% margin, price at cost ÷ 0.70 — 142.86 for a product that costs 100.

Is profit margin calculated with or without VAT?

Without. VAT belongs to the tax authority, not the seller. If you know the VAT-inclusive price, divide by (1 + VAT rate) to get the net price first; the tool does this for you.

How do I set a selling price?

With cost-based pricing: cost ÷ (1 − target margin). For a cost of 60 and a 35% target margin, the price excluding VAT is 92.31; with 20% VAT it's 110.77. Treat this as a floor and weigh the final price against perceived value and competitors.

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