Profit Margin & Markup Calculator United Kingdom

What the profit margin and markup calculator does

Enter what a product costs you and what you sell it for, and the calculator gives the profit per unit, the profit margin and the markup, so you can test prices before committing to them.

Margin and markup are often confused, and mixing them up leads to underpricing. Showing both from the same inputs makes the gap between them clear.

Profit, margin and markup defined

Profit per unit is the selling price minus the cost. A product that costs £40 and sells for £100 makes £60 profit.

Margin is profit as a share of the selling price: £60 on a £100 sale is a 60% margin. It tells you how much of each pound a customer pays is profit, which is why accountants and investors use it.

Markup is the same profit as a share of the cost: £60 on a £40 cost is a 150% markup. It tells you how much you added on top of what you paid, which is how buyers and retailers often set shelf prices.

Why margin and markup differ

Margin divides by the selling price and markup by the cost, and the price is larger than the cost on any profitable sale, so markup is always the bigger percentage. The same £60 is 60% of the price but 150% of the cost.

The risk is quoting a markup as if it were a margin. A shopkeeper who wants a 50% margin but applies a 50% markup ends up with a 33% margin.

Setting a price from a target margin

Most sellers start from a margin they want to protect and work back to a price: selling price equals cost divided by one minus the margin as a decimal. A £40 cost at a 60% margin needs a £100 price, because £40 ÷ 0.40 = £100.

Working from markup is just as valid and often quicker: a 150% markup means multiplying the cost by 2.5. Adjust the price in the calculator and watch both percentages move until you hit your margin while staying sensible against competitors.

How the calculation works

• It subtracts the cost from the selling price for the profit per unit.
• It divides the profit by the selling price for the margin.
• It divides the profit by the cost for the markup.
• It splits the selling price into cost and profit in the chart.

If the selling price is below the cost, the profit and both percentages are negative, which correctly signals a sale at a loss.

What to enter for a reliable result

Use a cost and selling price that both exclude VAT. VAT is collected for HMRC and passed on, so including it inflates the price without adding profit and distorts both percentages.

Use the landed cost of one unit: the purchase price plus any freight, duty or packaging that scales with each unit. Fixed overheads such as rent are usually handled separately in a break-even calculation, which keeps margins comparable across products.

Reading your result

Use the margin when talking to an accountant, a bank or an investor, since it is the language of financial statements. Use the markup when setting a price at the counter or negotiating with a supplier, since that is how the trade usually talks.

If you are considering a discount, lower the selling price and watch the margin fall to see how much room a promotion leaves before the sale stops being worthwhile.

When to use this tool

• To price a new product from a target margin or markup.
• To translate a quoted markup into the margin it really gives.
• To check that a planned discount still leaves an acceptable margin.
• To compare the profitability of two products like for like.

Recalculate whenever a supplier changes a cost.

This is general information only and not financial advice.

About This Profit Margin and Markup Calculator

Use this profit margin and markup calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.