Margin & Markup Calculator
Margin and markup describe the same gap between cost and price, but they measure it against different things — and confusing the two is the single most common pricing mistake small businesses make. Margin is profit as a percentage of the sale price; markup is the same profit as a percentage of the cost. A product bought for £60 and sold for £100 carries a 40% margin but a 66.67% markup. Neither figure is wrong — they answer different questions — but treating a target margin as if it were a markup quietly leaves money on the table on every single sale.
This calculator takes just two numbers — your cost price and your sale price — and returns the profit per unit alongside both percentages side by side, so you can see exactly how they relate. It is built for UK small businesses, retailers and freelancers: prices are treated as ex-VAT, the maths is shown in plain English below, and a negative result is reported honestly rather than hidden, so you can spot a loss-making line before it spreads across your catalogue.
How this calculator works
Three plain calculations do all the work:
Profit per unit = sale price − cost price. This is the cash each sale leaves before fixed overheads. It can be negative — if cost exceeds price you're selling at a loss — and the calculator shows that figure rather than clamping it to zero.
Gross margin = profit ÷ sale price × 100. It expresses profit as a share of the money the customer hands over, so it can never exceed 100%. If the sale price is £0 the figure is undefined, so the calculator says so instead of dividing by zero.
Markup = profit ÷ cost price × 100. It expresses the same profit as a share of what the item cost you, and it has no upper limit. If the cost price is £0 the markup is undefined and is flagged rather than shown as a misleading number.
Worked example
Suppose a unit costs you £60 and you sell it for £100. Profit per unit = £100 − £60 = £40. Gross margin = £40 ÷ £100 × 100 = 40% — you keep 40p of every £1 of revenue. Markup = £40 ÷ £60 × 100 = 66.67% — you added roughly two-thirds on top of cost to reach the price. Notice the same £40 produces two very different percentages: if you had set the price by applying a 40% markup to the £60 cost you'd have charged only £84, not £100, and earned £16 less per unit. That £16 gap, repeated across thousands of sales, is why the distinction matters.
Assumptions & limits
- Prices are treated as excluding VAT. If you trade VAT-inclusive, enter the ex-VAT cost and ex-VAT sale price so the percentages aren't distorted by tax.
- Only the direct cost of one unit is used. This is a gross figure — it does not deduct fixed overheads, marketing, returns or payment fees, so true net profit is lower.
- A single product at a single price is assumed. For a mixed range, run each line separately or use a weighted average cost and price.