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Profit margin and markup, worked out.

Enter what something costs you and what you sell it for, and see the profit, the margin and the markup. Or enter the margin you want and see the price to charge.

  • Margin and markup side by side
  • Price with 19% VAT
  • Free, no sign-up
Work out

What one item or job costs you, before VAT.

What you charge, before VAT.

Your margin

Selling price, before VAT
€100.00
Cost
− €60.00
Profit
€40.00
Markup
66.67%
Price with 19% VAT
€119.00
Margin40%

Profit as a share of the selling price.

Margin and markup are worked on prices before VAT. The VAT you charge goes to the Tax Department, so it isn't part of your profit. The line with 19% VAT is what a customer pays if you're VAT-registered and the standard rate applies.

Margin or markup, which is which.

Both compare the same profit. Margin divides it by the price, markup by the cost. So the markup is always the larger number.

  1. 01Profit is the selling price less the cost, both before VAT.
  2. 02Margin is the profit divided by the selling price. Markup is the profit divided by the cost.
  3. 03To hit a target margin, divide the cost by one minus the margin. A 40% margin on a €60 cost means €60 ÷ 0.6, a price of €100.
Margin and the markup it takes
10% margin11.11% markup
20% margin25% markup
25% margin33.33% markup
30% margin42.86% markup
40% margin66.67% markup
50% margin100% markup
60% margin150% markup

Margins and pricing, answered.

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Both start from the same profit. Margin is profit as a share of the selling price; markup is profit as a share of the cost. Selling for €100 something that costs €60 is a 40% margin and a 66.67% markup. Mixing the two up is a common way to underprice.

Take the selling price, subtract the cost, and divide the result by the selling price. With a price of €100 and a cost of €60, the profit is €40 and the margin is €40 ÷ €100, or 40%.

Divide the cost by one minus the margin. For a 40% margin on a €60 cost, that's €60 ÷ 0.6, a price of €100. Adding 40% to the cost instead would give €84, which is only a 28.57% margin.

No. Work on prices before VAT. If you're VAT-registered, the 19% you add to a sale belongs to the Tax Department, and the VAT on your costs comes back to you, so neither is part of your profit. If you're not registered, you can't reclaim the VAT you pay, so count it as part of your cost.

It's the gross margin on one item or job: the price less what that sale costs you directly. Net margin also takes off rent, software, salaries and every other overhead, and you read it from your profit and loss for the whole business.

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