Profit Margin and Markup Calculator
Work out profit margin and markup from cost and price, or the selling price you need for a target margin or markup.
New: please check your results.
- Profit margin
- 40%
- Profit
- £40.00
- Markup
- 66.67%
What it does
Margin and markup both describe profit, but they're measured against different things, and mixing them up is a common pricing mistake. Work out both from a cost and a selling price, or find the price you need to charge to hit a target margin or markup.
How to use it
- What do you want to work out?
Choose the sum you need, and the boxes change to match.
- Cost
What the item or job costs you: materials, stock or the direct cost of delivering it. Leave out VAT if you're VAT registered.
- Selling price
What you sell it for, before VAT.
- Target margin
The share of the selling price you want to keep as profit.
- Target markup
How much to add on top of the cost, as a percentage of the cost.
Common uses
- Pricing products, stock or jobs so they make the profit you want.
- Checking a supplier's suggested retail price.
- Adding VAT to your selling price. Try the VAT Calculator (UK)
- Setting a freelance day rate. Try the Freelance Day Rate Calculator
The formula
Profit = selling price − costMargin = profit ÷ selling price × 100Markup = profit ÷ cost × 100Price for a margin = cost ÷ (1 − margin ÷ 100)Price for a markup = cost × (1 + markup ÷ 100)Where:
- Margin
- profit as a share of the selling price
- Markup
- profit as a share of the cost
Use prices without VAT: VAT isn't your profit, it's collected for HMRC.
Worked example
Buying at £60 and selling at £100:
- Profit: £100 − £60 = £40.00
- Margin: £40.00 ÷ £100 = 40%
- Markup: £40.00 ÷ £60 = 66.67%
Questions people ask
What's the difference between margin and markup?
Both use the same profit, but margin divides it by the selling price and markup divides it by the cost. Buying at £60 and selling at £100 is a 40% margin but a 66.7% markup. Margin can never reach 100%; markup can be any size.
What's a good profit margin?
It depends on the trade. Supermarkets work on a few percent, while services and software can make 50% or more. Compare with businesses like yours, and remember this is gross margin: your overheads still have to come out of it.
Why doesn't a 40% markup give a 40% margin?
Because they're percentages of different numbers. A 40% markup on £100 cost gives a £140 price and £40 profit, which is only 28.6% of the price.
Last checked 26 October 2026