Mark-up and margin are often confused, yet they give different percentages for the same sale. Enter what you know to see cost, price, profit, mark-up and margin together.
Results are estimates for planning. Check the figures before you make a financial or health decision.
How the Mark-up and profit margin calculator works
Choose what you know and the calculator fills in the rest.
- Mark-up % = profit ÷ cost × 100.
- Profit margin % = profit ÷ selling price × 100.
- From cost and a desired margin: price = cost ÷ (1 − margin).
- From cost and a desired mark-up: price = cost × (1 + mark-up).
- From price and margin: cost = price × (1 − margin).
The same profit gives a smaller margin than mark-up, because margin divides by the larger number (the price). Margin cannot reach 100%, so the tool rejects that, while mark-up can be any size.
The optional VAT line adds VAT on top of the selling price at the rate you type (20% is the UK standard rate; check GOV.UK for others). Margins here are worked on the price before VAT, which is the money your business keeps.
Worked example
Using the default values in the calculator above:
| Input | Value |
|---|---|
| What you know | Cost and selling price |
| Cost price | £40 |
| Selling price (before VAT) | £60 |
| Show a VAT line | Yes |
| VAT rate | 20 % |
Profit margin: 33.33%
| Cost price | £40.00 |
|---|---|
| Selling price | £60.00 |
| Profit | £20.00 |
| Mark-up (profit ÷ cost) | 50% |
| Profit margin (profit ÷ price) | 33.33% |
| VAT on selling price at 20% | £12.00 |
Tips and common mistakes
Decide which measure your business talks in and stick to it, because mixing them leads to under-pricing. A 25% mark-up does not give a 25% margin; it gives 20%. Work margins on the ex-VAT price, as VAT is passed to HMRC. Remember that the cost price should include everything specific to the sale, such as delivery and fees, or the margin will look healthier than it is. For discounts, check the new margin: a sale price can wipe out most of the profit.
Frequently asked questions
What is the difference between mark-up and margin?
Mark-up is profit as a percentage of cost. Margin is profit as a percentage of the selling price. A product costing 40 and selling for 60 has a 50% mark-up but a 33.3% margin.
How do I turn a margin into a mark-up?
Mark-up = margin ÷ (1 − margin). A 20% margin is a 25% mark-up. This calculator shows both whichever way you start.
Should VAT be included in the margin?
No. Calculate margin on the price excluding VAT. The VAT line is there so you can see the price the customer pays.
Guides that help
- Break-even point and profit margin: how to work them out
- VAT explained: adding and removing VAT
- Percentage change, increases and discounts