What is the difference between Margin and Markup?

Margin is profit expressed as a percentage of the selling price, while Markup is profit expressed as a percentage of the direct cost price.

What is a healthy profit margin for a UK business?

A 10% net profit margin is considered healthy, while 20% or higher is considered high across most UK business sectors.

How do I calculate the selling price from a desired margin?

Divide your cost by (1 minus your desired margin decimal). For example, £60 cost at a 40% margin equals £60 / (1 - 0.40) = £100.

Profit Margin Calculator

Calculate gross profit margin, revenue markups, and net profit margins instantly to price products and services profitably.

Pricing Inputs

Cost of Goods / Service (COGS)

Selling Price (Revenue)

Target Gross Margin %

Operating Overheads & Ad Spend (Optional)

Profitability Breakdown

Gross Profit Margin

40.0%

Markup: 66.7% | Gross Profit: £30.00

Revenue Distribution 26.7% Net Profit

COGS Cost Overheads Net Profit

Recommended Selling Price £75.00
Cost of Goods (COGS) -£45.00
Gross Profit £30.00
Cost Markup Multiplier 66.67% (1.67x)
Operating Expenses / Overheads -£10.00
Net Profit Margin £20.00 (26.67%)

How to Calculate Profit Margin & Markup

Profit margin measures the percentage of sales revenue that your business retains after paying direct production costs (Gross Margin) and indirect overheads (Net Margin).

Enter Your Cost of Goods (COGS) Input the direct expenditure required to manufacture, source, or deliver a single unit or project.
Select Calculation Mode Enter your known retail price to find your current margin, or set a target margin percentage to calculate the optimal selling price.
Account for Operating Overheads Optionally add transaction processing fees, customer acquisition costs (ad spend), and packaging to determine your true bottom-line net profit.
Evaluate Markup vs. Margin Check the markup multiplier to know exactly what percentage you must add on top of raw costs to preserve your target margin.

Frequently Asked Questions

Margin is profit expressed as a percentage of the selling price (Revenue), whereas Markup is profit expressed as a percentage of your cost price (COGS). For example, if a product costs £50 and sells for £100, your markup is 100%, but your gross profit margin is 50%.

As a standard UK benchmark: a 5% net margin is considered low, 10% is healthy, and 20% or higher is considered high. Retail and groceries operate on lean 2% to 5% margins, whereas digital services, consultancy, and SaaS often exceed 40% net margins.

To find your selling price from a target margin: divide your cost by (1 minus your target margin decimal). For a £60 cost and a desired 40% margin: £60 / (1 – 0.40) = £60 / 0.60 = £100 selling price.

Profit margin calculations should always be performed on net figures (excluding VAT). VAT collected from customers is a statutory liability owed to HMRC and does not count towards company revenue.

Official Business Resources

Explore official UK guidance on pricing, VAT, and business financial management:

Disclaimer

This calculator is provided for financial planning and commercial estimation purposes only.

Commercial Guidance

Calculations do not account for variable merchant settlement fees, localized import duties, corporation taxes, or bulk volume discounts. Consult a qualified accountant for certified commercial pricing audits.