Mixing up markup and margin
Quoting a 60% markup when you mean a 60% margin distorts every pricing decision.
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Work out your margin and your selling price.
Enter your cost price and your selling price, multiplier or target margin. Gross margin, markup, margin percentage and price incl. VAT update in real time.
- Real-time calculation
- Excl. and incl. VAT
- Free, no sign-up
No data storedFormulas explainedWorked example
Your margin in real time
Change a value: everything recalculates.
Four formulas worth knowing
The same ones the calculator uses.
Gross margin = selling price excl. VAT − cost price excl. VAT
Markup = gross margin ÷ cost price excl. VAT × 100
Margin percentage = gross margin ÷ selling price excl. VAT × 100
Multiplier = selling price excl. VAT ÷ cost price excl. VAT
A product bought for €40, sold for €100 excl. VAT
The gross margin is €60. The markup is 150%, because €60 is one and a half times the cost price. The margin percentage is 60%, because €60 is 60% of the selling price.
The multiplier is 2.5. With VAT at 20%, a consumer pays €120 including VAT.
If you are aiming for a 60% margin on another product bought for €25, the selling price excl. VAT is: 25 ÷ (1 − 0.60) = €62.50.
What skews your calculations
Calculating on prices incl. VAT
VAT is not income. A margin calculated on prices including VAT looks better than it really is.
Forgetting hidden costs
Delivery, packaging, payment fees, returns: they are all part of your cost price.
One multiplier for everything
An entry-level product and a premium product cannot carry the same multiplier.
Your questions about margin
What is the difference between markup and margin?
Markup compares your profit with the cost price. Margin compares your profit with the selling price excluding VAT. For a product bought for €40 and sold for €100 excl. VAT, the gross profit is €60: the markup is 150%, the margin is 60%.
How do you work out a selling price from a multiplier?
Multiply the cost price excl. VAT by the multiplier. With a cost of €40 and a multiplier of 2.5, the selling price excl. VAT is €100. The multiplier includes your margin, but also enough to cover your overheads.
What multiplier should I use in my business?
It depends on your fixed costs, your volumes and market prices. Work out your break-even point first, then check that the chosen multiplier covers your costs with a safety margin.
Should margin be calculated on the price excluding or including VAT?
Always excluding VAT. The VAT you collect is not yours: you pay it over to the tax authority. The price including VAT is only used to display prices to consumers.
I'm not VAT-registered, what should I choose?
Choose 0%: you do not charge VAT, so your price excl. VAT is also the price the customer pays. However, the VAT you pay to your suppliers is part of your cost price.
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