Profit Margin Calculator
Calculate your profit margin and markup, or find the price you need to charge for any desired margin.
Profit Margin Calculator
Calculate margins, markups, and target pricing
Understanding Margin vs Markup
Margin and markup are both ways to express profit, but they use different bases for the calculation. Understanding the difference is critical for pricing and financial reporting.
What percentage of your selling price is profit. A 40% margin means you keep £40 of every £100 in revenue.
What percentage you add to your cost to get the selling price. A 66.7% markup on a £60 cost gives a £100 price.
Margin vs Markup: Quick Reference
| Margin | Equivalent Markup |
|---|---|
| 10% | 11.1% |
| 20% | 25.0% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100.0% |
How to Calculate the Right Price
If you know your costs and desired margin, use this formula to find the price to charge:
Example: Your cost is £60 and you want a 40% profit margin:
£60 ÷ (1 − 0.40) = £60 ÷ 0.60 = £100
This gives you a profit of £40 on £100 revenue—a 40% margin and 66.7% markup.
Track Your Profitability
Experi helps you create invoices, track payments, and understand your business performance. See your revenue and outstanding invoices at a glance.
Frequently Asked Questions
What is the difference between margin and markup?
Profit margin is the percentage of revenue that is profit (profit ÷ revenue × 100). Markup is the percentage added to cost to get the selling price (profit ÷ cost × 100). For example, if you buy for £60 and sell for £100: margin is 40% (£40 ÷ £100) but markup is 66.7% (£40 ÷ £60).
What is a good profit margin for a small business?
A "good" profit margin varies by industry. Service businesses (consulting, design, development) typically achieve 50–70% gross margins. Retail businesses usually see 20–50%. Construction and manufacturing often range from 10–30%. The key is to know your industry benchmark and aim to exceed it.
How do I calculate the price to charge for a specific profit margin?
Use the formula: Price = Cost ÷ (1 − Margin%). For example, if your cost is £60 and you want a 40% margin: £60 ÷ (1 − 0.40) = £60 ÷ 0.60 = £100. You would charge £100 to achieve a 40% profit margin.
Should I use margin or markup when pricing?
Both are valid, but margin is generally more useful for financial analysis because it tells you what percentage of your revenue is profit. Markup is simpler for day-to-day pricing—just add a percentage to your cost. Many businesses use markup for pricing and margin for reporting.