About this calculator
Profit margin is the share of your selling price that you keep as profit. If you sell something for £100 that cost you £60, you keep £40, so your margin is 40%.
This calculator works in three directions. Give it your cost and price to see your margin, give it your cost and a target margin to find the price to charge, or give it your price and target margin to find the most you can afford to spend.
Worked examples
Real numbers, worked out by the same calculator. Press “Use these numbers” to try one above.
Cost £60, sold for £100
- Profit margin
- 40%
- Profit
- £40.00
- Markup
- 66.67%
Selling at £100.00 something that costs £60.00 leaves £40.00, which is 40% of the price (a 66.67% markup on cost).
Cost £60, want a 40% margin
- Selling price to charge
- £100.00
- Profit
- £40.00
- Profit margin
- 40%
- Markup
- 66.67%
To make a 40% margin on a cost of £60.00, charge £100.00.
Selling at £100, want a 30% margin
- Most you can spend (cost)
- £70.00
- Profit
- £30.00
- Profit margin
- 30%
- Markup
- 42.86%
To keep a 30% margin on a price of £100.00, your cost can be at most £70.00.
The formulas
Margin = (price − cost) ÷ price × 100.
Price for a target margin = cost ÷ (1 − margin). For a 40% margin, that's cost ÷ 0.6, which is the same as multiplying the cost by 1.667.
Highest cost for a target margin = price × (1 − margin).
This tool works out gross margin: the price minus the direct cost of what you sold. It does not include overheads such as rent, wages or software, so your overall profit will be lower.
Margin is not markup
Margin is a share of the price. Markup is a share of the cost. The same sale gives two different percentages, and mixing them up is the most common pricing mistake.
| Markup on cost | Profit margin on price |
|---|---|
| 25% | 20% |
| 50% | 33.33% |
| 100% | 50% |
| 200% | 66.67% |
A margin can never reach 100%, because that would mean the cost was zero. A markup can be any size.
Frequently asked questions
How do I calculate profit margin?
Subtract your cost from your selling price, divide by the selling price, and multiply by 100. Cost £60 and price £100 gives (100 − 60) ÷ 100 = 40%.
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A 50% markup is only a 33.33% margin.
How do I price something to get the margin I want?
Divide your cost by 1 minus the margin as a decimal. For a 30% margin on a £70 cost, divide 70 by 0.7 to get £100. Don't just add 30% to the cost: that gives a smaller margin.
What is a good profit margin?
It depends heavily on the type of business. Products with low volumes and lots of service usually need higher margins than high-volume commodities. Compare against businesses like yours, and make sure the margin covers your overheads.
Does this include VAT, wages and overheads?
No. Enter your direct cost and your price on the same VAT basis (both before VAT is best). Overheads need to be covered by the profit you calculate here.
Formulas tested against hand-worked answers. Last reviewed 29 September 2026. These calculators do arithmetic only; they are not financial, tax or legal advice.