Margin calculator
The formula, a worked example, and the error this particular calculation tends to produce.
How it works
Margin is profit as a share of the selling price. It is the figure accountants, investors and marketplaces mean, and it is what tells you how much of each sale you keep.
The formula
margin = (price − cost) ÷ price price = cost ÷ (1 − margin)
- Choose "Cost and target margin".
- Enter the unit cost and the margin you want.
- Read the selling price, the profit, and the markup it corresponds to.
Worked example
| Item | Value |
|---|---|
| Cost | ₹1,000.00 |
| Margin | 40% |
| Selling price | ₹1,666.67 |
| Profit | ₹666.67 |
| Markup | 66.67% |
The mistake to avoid
Dividing by cost instead of price. That gives markup, a bigger number for the same trade, and quoting it as margin overstates the health of the business to anyone reading it.
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.