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Tax & Margin Calculator

Discount and margin calculator

The formula, a worked example, and the error this particular calculation tends to produce.

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How it works

A discount comes off the selling price, but the cost does not move — so the margin falls much faster than the discount suggests. This shows how far.

The formula

price after = list × (1 − discount) new margin = (price after − cost) ÷ price after

  1. Open the "Cost to shelf" tab and enter your unit cost.
  2. Enter the margin you price at, then the discount you plan to run.
  3. Read the margin you actually keep after the discount.

Worked example

Example
Item Value
Cost₹1,000.00
Selling price₹1,666.67
Discount20%
Price after discount₹1,333.34
Margin25%

The mistake to avoid

Assuming a 20% discount costs 20% of the margin. On a 40% margin, a 20% discount leaves 25% — it takes well over a third of the profit, not a fifth.

Questions people ask

What is the difference between margin and markup?
Markup is profit as a share of cost; margin is profit as a share of the selling price. Cost 100 with a 50% markup sells at 150; cost 100 at a 50% margin sells at 200. They agree only at zero, and the gap widens as the percentage rises — at a 70% target the difference is more than double.
Should I apply my margin before or after tax?
Before. Consumption tax is collected on behalf of the government and was never your revenue, so the margin belongs on the tax-exclusive price. Taking the margin on the tax-inclusive figure understates your real margin and underprices the item.

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