Profit Margin & Markup Calculator
Understand gross profit, compare margin with markup, or work backwards to a selling price.
LedgerKit provides estimates based on the information entered and the configured rates. Results do not constitute accounting, tax or legal advice. Check the latest official guidance or consult a qualified professional before acting on a calculation.
How this calculator works
Use costs and prices excluding VAT to compare like with like. Margin measures gross profit as a share of selling price; markup measures it as a share of cost.
For a target margin, divide cost by 1 minus the target percentage as a decimal. For a target markup, multiply cost by 1 plus that percentage. Optional VAT shows the customer-facing price only.
Worked example
Buy for £80 and sell for £100: gross profit is £20, margin is 20% and markup is 25%. A 20% target margin on an £80 cost therefore needs a £100 selling price.
Frequently asked questions
Are margin and markup interchangeable?
No. A 25% markup on £80 gives a £100 selling price and a 20% margin. They use different denominators.
Is this net profit?
No. These figures are gross profit before overheads, finance costs, taxes and other business expenses unless you deliberately include relevant costs in the unit cost.
Can I calculate a loss?
Yes. A selling price below cost returns negative profit, margin and markup, with a clear loss warning.
Why must the target margin be below 100%?
At 100%, the selling-price formula divides by zero. Markup also needs a positive cost. If the selling price is zero, the margin is reported as undefined rather than a misleading number.