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Provense. Online Accountants

Margin & markup calculator

Turn cost and price into gross profit, profit margin and markup — or work backwards from a target margin to the price you should charge.

Your figures

What do you know?

We’ve started you on “Cost & price”. Switch if you want to work back to a price.

What the item costs you.

What the customer pays.

Set this to see total gross profit and revenue.

Your result

Gross margin

0%

 

Selling price
£0
Cost price
£0
Gross profit
£0
Profit margin
0%
Markup
0%
See your true net margin

A simple gross-margin tool: it works on cost and selling price only and ignores VAT, overheads and other costs. For your true net margin after every cost, that’s what our management accounts do.

Margin and markup are easy to mix up — and getting them wrong quietly eats your profit. This calculator does both: give it your cost and price to see your gross profit, profit margin and markup, or set the margin (or markup) you want and it tells you the price to charge.

Markup vs margin — they’re not the same

Both describe the same gross profit, but against a different base — so the same money gives two different percentages. Quote a markup as if it were a margin and you’ll undercharge:

MarkupEquivalent margin
20%16.7%
25%20%
50%33.3%
100%50%
150%60%

Margin = profit ÷ selling price. Markup = profit ÷ cost. Markup is always the bigger number.

Gross margin isn’t your real profit

This tool shows gross margin — price minus the cost of the item. Your real, take-home profit is lower, because it also has to cover:

  • Overheads. Rent, software, marketing, wages and the rest of running the business.
  • Selling costs. Marketplace and payment fees, delivery, packaging and returns.
  • Tax. Corporation Tax or income tax on the profit that’s left, and VAT on the sale if you’re registered.

Strip all of that out and you have your net margin — the number that actually matters. Our management accounts show it by product and month, so you price to keep more.

In plain English

The terms, explained

New to this? Here’s what the words on this page actually mean.

Cost price
What the item costs you — to buy, make or deliver — before you add any profit.
Selling price
What the customer pays. Selling price minus cost price is your gross profit.
Gross profit
The cash left over on a sale after the cost of the item, before overheads, tax and other costs.
Profit margin
Gross profit as a percentage of the selling price. A £10 profit on a £40 sale is a 25% margin.
Markup
Gross profit as a percentage of the cost. That same £10 profit on a £30 cost is a 33% markup — same money, bigger number.
FAQ

Margin & markup calculator — your questions answered

How do I calculate profit margin?
Subtract the cost from the selling price to get your gross profit, then divide that by the selling price and multiply by 100. For example, a £40 sale that cost you £30 makes £10 profit, and £10 ÷ £40 = 25% margin. Enter your cost and price above to see it instantly.
What is the difference between margin and markup?
They measure the same profit against different bases. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. A 50% markup is only a 33.3% margin, so quoting markup as if it were margin leaves you short. This calculator shows both at once so you never confuse them.
How do I work out the selling price from cost and margin?
Divide the cost by (1 minus the margin as a decimal). To hit a 30% margin on a £7 cost: £7 ÷ (1 − 0.30) = £10. Switch the calculator to “Cost & target margin” above and it does this for you.
What is a good profit margin?
It varies hugely by sector — grocery and electronics run on thin single-digit margins, while services and software can exceed 50%. As a rough guide, a 10% net margin is considered average and 20%+ healthy for many small businesses. Gross margin (what this tool shows) is always higher than net, because net comes after overheads and tax.
How do I calculate markup percentage?
Divide your gross profit by the cost and multiply by 100. A £10 profit on a £30 cost is £10 ÷ £30 = 33.3% markup. Use “Cost & price” mode above and the markup is calculated alongside your margin.
Is gross margin the same as gross profit?
Closely related but not identical: gross profit is the cash amount (£), while gross margin is that profit expressed as a percentage of sales. £10 of gross profit on a £40 sale is a 25% gross margin. This calculator shows both.
Need a hand with this?

We can do it properly for you

A calculator gives you a number; we give you a plan to pay less. Explore the services and specialists this relates to:

Small business accountants Ecommerce accountants Shopify accountants Management accounts service

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