How do I calculate profit margin?

Subtract the cost from the selling price to get gross profit, then divide the gross profit by the selling price and multiply by 100. Selling at R1 200 something that cost R800 is R400 profit, a 33.33% margin.

What is the difference between margin and markup?

Margin is profit as a share of the selling price. Markup is profit as a share of the cost. The same R400 profit on an R800 cost is a 50% markup but a 33.33% margin.

What price gives me a 30% margin?

Divide the cost by 0.7 (that is, by 1 minus the margin). An item costing R700 needs to sell for R1 000 to make a 30% margin.

← Tools

Profit margin calculator, in rands

Put in what something costs you and what you sell it for, and see the margin you actually make. Or put in the margin you want and get the price to charge.

Cost price

What the item or job costs you: stock, materials, labour. Rands; spaces and commas are fine.

Selling price

Leave it empty to work out a price from a target margin instead.

Target margin (%)

Used with the cost price to suggest a selling price.

Enter a cost price, and either a selling price or a target margin. The answer appears here.

Margin is profit as a share of the selling price. Markup is profit as a share of cost. A 50% markup is a 33.33% margin, which is why pricing with one and reading accounts in the other goes wrong.

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Gross margin is before overheads: rent, salaries, fuel, software. A business can run a healthy gross margin on every sale and still lose money each month if the overheads are bigger than the gross profit.

Use the same basis on both sides. Cost and price both excluding VAT, or both including it. Mixing them makes a VAT-registered business look 15% more profitable than it is.

Questions owners ask

How do I calculate profit margin?: Subtract the cost from the selling price to get gross profit, then divide the gross profit by the selling price and multiply by 100. Selling at R1 200 something that cost R800 is R400 profit, a 33.33% margin.
What is the difference between margin and markup?: Margin is profit as a share of the selling price. Markup is profit as a share of the cost. The same R400 profit on an R800 cost is a 50% markup but a 33.33% margin.
What price gives me a 30% margin?: Divide the cost by 0.7 (that is, by 1 minus the margin). An item costing R700 needs to sell for R1 000 to make a 30% margin.

Pricing with markup instead? Use the markup calculator. Adding VAT to the price: the VAT calculator.

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