Profit Margin & Markup Calculator

Calculate profit margin, markup percentage and selling price from cost and revenue.

Last updated: April 2026 · Source: GOV.UK – Set Up a Business

Profit Margin Calculator

£
£

Markup Calculator

£

Disclaimer

This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.

How It Works

Profit margin and markup are both measures of profitability but use different denominators, which is a frequent source of confusion in business. Margin is calculated as: (Revenue − Cost) ÷ Revenue × 100. It tells you what percentage of the selling price is profit. Markup is calculated as: (Revenue − Cost) ÷ Cost × 100. It tells you what percentage above cost you have charged. The same transaction produces very different numbers: selling at £100 with a cost of £60 gives a 40% margin but a 66.7% markup.

To convert between the two: Margin = Markup ÷ (1 + Markup), and Markup = Margin ÷ (1 − Margin). A 50% markup equals a 33.3% margin. A 100% markup equals a 50% margin. These formulas are essential when pricing products—if your target gross margin is 30%, you need to apply a 42.9% markup to your costs, not 30%.

Gross margin uses only direct costs (cost of goods sold) and reflects production efficiency. Net margin includes all overheads, tax, and interest, showing true bottom-line profitability. UK retail averages range from 2–5% net margin (supermarkets) to 50–70% gross margin (software). Tracking margin per product line, per client, or per period highlights where your business generates and erodes value.

Margin and markup on a product sold for £45

  1. Selling price: £45.00. Cost of goods: £27.00.
  2. Gross profit: £45.00 − £27.00 = £18.00.
  3. Margin: £18.00 ÷ £45.00 × 100 = 40.0%.
  4. Markup: £18.00 ÷ £27.00 × 100 = 66.7%.
  5. To achieve a 40% margin on a new product costing £30, set price at £30 ÷ (1 − 0.40) = £50.00.

Source: GOV.UK – Set Up a Business

Frequently Asked Questions

What does the Profit Margin & Markup Calculator do?
Calculate profit margin, markup percentage and selling price from cost and revenue. All calculations are performed in your browser using official UK rates and thresholds.
Is this suitable for my business?
This calculator provides general estimates based on standard UK business rates and rules. Every business is different — consult your accountant for advice specific to your circumstances.
Does this use 2025/26 tax rates?
Yes. All rates and thresholds are based on the current 2025/26 UK tax year. Corporation Tax main rate is 25% for profits over £250,000, with a 19% small profits rate.