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Profit margin and markup calculator

Margin divides profit by the price, markup divides it by the cost. Enter a cost and a price to see both, and the price that hits the margin you want.

What one unit costs you, landed: purchase price, freight, duties.

Without VAT or sales tax.

To see the price that gives this margin at your cost.

Result

Fill in unit cost, selling price to see the result.

How it works

Margin and markup describe the same profit against two different bases. Margin is the share of the selling price you keep. Markup is how much you add on top of the cost. Because the price is bigger than the cost, the markup is always the bigger percentage, and mixing the two up is how prices end up lower than planned.

gross profit = price - cost
margin = (price - cost) ÷ price
markup = (price - cost) ÷ cost

price for a target margin =
  cost ÷ (1 - target margin)
markup for a margin =
  margin ÷ (1 - margin)

What each term means

Unit cost
What one unit costs you, landed: purchase price, freight and duties.
Selling price
What the customer pays for it, without VAT or sales tax.
Gross profit
Price minus unit cost, before shipping, fees, ads or overheads.
Profit margin
Gross profit as a share of the price. See profit margin in the glossary.
Markup
Gross profit as a share of the cost. It is not defined for a cost of zero.

What it leaves out: everything after the product. Shipping, payment fees and ad spend come out of the gross profit shown here; the contribution margin calculator takes them off one line at a time.

Source: Wikipedia, Gross margin (margin, markup and the conversion between them) (read 26 September 2026).

Worked example

Example numbers, round on purpose, not a real store:

Unit cost
€40
Selling price
€90
Target margin
60%
  1. 1Gross profit: €90 - €40 = €50.00
  2. 2Margin: €50 ÷ €90 = 55.6%
  3. 3Markup: €50 ÷ €40 = 125%
  4. 4Price for a 60% margin: €40 ÷ (1 - 60%) = €100.00
  5. 5Markup for a 60% margin: 60% ÷ 40% = 150%
  6. 6The usual slip: €40 + 60% = €64, a margin of €24 ÷ €64 = 37.5%

So to earn a 60% margin on a €40 cost, this example needs €100, not the €64 that a 60% markup gives.

Frequently asked questions

  • What is the difference between margin and markup?
    Both start from the same gross profit, price minus cost. Margin divides it by the price: the share of each sale you keep. Markup divides it by the cost: how much you add on top of what you paid. A product bought at €40 and sold at €100 has a 60% margin and a 150% markup.
  • How do I convert markup to margin?
    Margin = markup ÷ (1 + markup), and markup = margin ÷ (1 - margin). A 100% markup is a 50% margin, and a 60% margin needs a 150% markup.
  • How do I price a product for a target margin?
    Divide the cost by one minus the margin. A €40 cost at a 60% margin needs €40 ÷ 0.4 = €100. Adding 60% to the cost gives €64, which is a 60% markup and only a 37.5% margin: the most common pricing slip between the two.
  • Is this gross margin or net margin?
    Gross margin: price minus the cost of the goods. Net margin also subtracts shipping, fees, ads, salaries and every other cost, so it is always lower. For what one order leaves after its own variable costs, use the contribution margin calculator.
  • Should the price include VAT?
    No. VAT or sales tax is collected for the tax authority, not earned, so enter both the cost and the price without it. Otherwise the tax inflates the margin you see.

In the glossary: profit margin.

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