Profit Margin & Markup Calculator
Turn cost and sale price into margin %, markup %, and profit per unit
Enter Your Numbers
Fill in your cost and selling price to calculate profit metrics
Enter your numbers to see results
How This Calculator Works
This calculator uses two fundamental business formulas to analyze your pricing:
Profit Margin Formula
Profit Margin % = (Selling Price - Total Cost) ÷ Selling Price × 100
This tells you what percentage of your selling price is actual profit. A £100 item with £60 total cost has a 40% margin.
Markup Formula
Markup % = (Selling Price - Total Cost) ÷ Total Cost × 100
This shows profit as a percentage of cost. The same £100 item has a 66.7% markup (£40 profit ÷ £60 cost).
**Why Two Numbers?** Margin and markup sound similar but give very different percentages from the same numbers. Margin is always lower because it divides by the larger number (selling price). Markup can exceed 100%, margin cannot.
The calculator also factors in per-unit overhead—hidden costs like packaging, payment fees, or shipping materials that eat into your profit but aren't in the base cost.
When to Use This Calculator
Pricing New Products
Before launching a product, use this to see if your planned price delivers enough margin to sustain your business.
Profitability Checks
Already selling? Input your current costs and prices to see if you're actually making money after all expenses.
Comparing Products
Calculate margins for different items to identify which products are worth promoting vs phasing out.
Discount Planning
Before offering a sale, check if a discount still leaves acceptable margin. A 50% off sale on a 40% margin item means you're selling at a loss.
Supplier Negotiations
When a supplier raises prices, instantly see how it impacts your margin and whether you need to raise your own prices.
Freelancers
If you charge per project, calculate your margin to ensure your pricing covers your time plus all business costs.
Common Mistakes to Avoid
Forgetting Overhead
Many people input material cost but forget packaging, payment processing fees (typically 2-3%), returns, or "free" shipping. These hidden costs can turn a 50% margin into 35%.
Confusing Margin with Markup
Setting a "50% markup" doesn't give you a 50% margin—it gives you 33%. This confusion causes businesses to underprice by 15-20%.
Using Inconsistent Time Periods
If cost includes monthly overhead, make sure you're calculating per-unit overhead correctly (monthly cost ÷ units sold per month).
Ignoring Currency Differences
Buying in USD but selling in GBP? Convert accurately and factor in exchange rate fluctuations.
Not Including Your Time
If you're making or delivering the product yourself, your time is a cost. £15 in materials plus 2 hours of your time at £25/hour = £65 total cost, not £15.
Targeting Too Low
Beginners often aim for 20-30% margins because it "seems fair." Most sustainable businesses need 40-60% gross margins to cover business overhead and growth.