Margin vs Markup Calculator
Margin and markup are easy to confuse and the difference matters when you're setting prices. This calculator converts between the two, calculates the selling price needed to hit a target margin, and shows the gross profit per unit — useful for retailers, trade businesses, and anyone running a side hustle on Etsy or eBay.
How is this calculated?
Markup is profit as a percentage of cost: markup = (price − cost) / cost × 100. Margin is profit as a percentage of selling price: margin = (price − cost) / price × 100. Given any two of cost, price, margin, or markup, the calculator solves for the others. To hit a target margin of m% on cost C, the selling price is C / (1 − m/100). VAT is excluded from these calculations — they operate on the net figures used in your accounting.
Frequently Asked Questions
Why isn't a 50% markup the same as a 50% margin?
Because they have different denominators. Cost £50, sell at £75: markup is £25/£50 = 50%; margin is £25/£75 = 33.3%. To produce a 50% margin you need a 100% markup. Mistaking one for the other is one of the most common pricing errors in small businesses.
What's a healthy gross margin?
It depends entirely on the sector. UK supermarkets run on 25%–30% gross margin, fashion retailers 50%–60%, restaurants typically 65%–70% on food and 75%+ on drinks, and SaaS often 75%+. Compare yourself against your sector peers, not a generic benchmark.
Should I price for margin or for markup?
Price for margin if you have fixed overheads to cover, because margin tells you what proportion of each sale is available to absorb them. Price for markup if you're trying to maintain a consistent multiple over a fluctuating cost base, common in import-heavy categories.
How does VAT fit in?
Margin and markup are calculated on the net figures (excluding VAT). VAT is a pass-through tax — you collect it from the customer and remit it to HMRC, so it never touches the profit line. Always make sure your cost figures and your selling price are both either gross or both net before doing the maths.
Last updated: May 2026 · Rates sourced from HMRC