Profit margin and markup calculator
Margin and markup describe the same profit from opposite ends, and mixing them up always makes a product look more profitable than it is. Pick what you know and get the rest.
How it is calculated
Net price (ex tax) = Selling price ÷ (1 + tax rate) Profit = Net price − Cost Gross margin = Profit ÷ Net price × 100 Markup = Profit ÷ Cost × 100 Price for margin m = Cost ÷ (1 − m) × (1 + tax rate) Price for markup k = Cost × (1 + k) × (1 + tax rate) Margin from markup = k ÷ (1 + k)
Tax such as GST or VAT is collected for the government, not earned, so margin is always worked out on the price excluding tax. Leave tax at 0 if your prices already exclude it.
How to use the result
Use gross margin to decide what you can afford to spend on discounts, shipping and advertising; every one of those comes out of it. The break-even ROAS calculator takes the next step and adds fulfilment, fees and returns.
Questions
What is the difference between margin and markup?
Margin is profit as a share of the selling price; markup is profit as a share of cost. A product that costs ₹400 and sells for ₹1,000 has a 60% margin and a 150% markup.
How do I calculate selling price from cost and margin?
Divide cost by one minus the margin. For a 60% margin on a ₹400 cost, the price is 400 ÷ 0.4 = ₹1,000 before tax. Add GST or VAT on top if your price includes it.
How do I convert markup to margin?
Margin equals markup divided by one plus markup. A 100% markup is a 50% margin, and a 50% markup is a 33.3% margin.
Should margin include GST?
No. GST is collected on behalf of the government, so calculate margin on the price excluding GST.
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