Profit margin and markup calculator
Margin and markup are easy to confuse and costly to mix up. Work out either from your cost and price, or set the price to hit a target.
How this is calculated
Profit per unit is the selling price less the cost.
Gross margin is profit divided by the selling price. Markup is profit divided by the cost.
For a target margin, the price is the cost divided by one minus the margin. For a target markup, the price is the cost times one plus the markup.
Rates used · 2026/27
| Margin | profit ÷ price |
| Markup | profit ÷ cost |
| 50% markup | 33.3% margin |
| 100% markup | 50% margin |
Last checked July 2026. Source: HMRC and gov.uk.
Worked example
Buying at £60 and selling at £100 makes £40 a unit: a 40% margin on the price but a 66.7% markup on the cost. To make a 40% margin on a £60 cost you need to sell at £100; a 50% markup would only give £90.
Common questions
What is the difference between margin and markup?
Margin is profit as a share of the price you sell at. Markup is profit as a share of what the item cost you. The same sale always has a higher markup than margin.
What is a good profit margin?
It depends on the industry. Retail and food margins are often thin, while software and services can be much higher.
Should I include VAT?
No. Use prices without VAT, because VAT you charge is passed to HMRC.
Is this gross or net margin?
Gross margin, before overheads like rent and wages. Net margin takes those off too.