Margin and markup calculator
Margin and markup are not the same thing - and VAT is not profit. Work out your product's real profit correctly.
The calculator works out the gross margin at product level: selling price minus the cost of the goods. Fixed costs, advertising and shipping are not included - for those there is the break-even calculator.
Margin and markup - what is the difference?
Both describe the same profit, but from a different base. Margin shows the profit as a share of the selling price, markup shows the same profit as a share of the cost price. That is why the markup percentage is always higher than the margin percentage.
Margin % = (selling price − cost price) ÷ selling price × 100
Markup % = (selling price − cost price) ÷ cost price × 100
Example: you buy a product for 60 € and sell it for 100 € (excl. VAT). The profit is 40 €. The margin is 40 ÷ 100 = 40%, the markup is 40 ÷ 60 = 66,7%. When someone says "let's add 50%", it is always worth asking which percentage they mean - the difference is large.
Two common mistakes
- VAT is counted as profit. Out of a 122 € selling price (incl. VAT), 98.39 € is your money - the 23.61 € of VAT goes to the state. Margin must always be calculated from prices excluding VAT.
- Markup is used instead of margin. A 50% markup gives only a 33.3% margin. If your advertising and fixed costs are planned against a "50% margin" but you actually have a 50% markup, every sale leaves you a third worse off than you thought.
Good to know
Is margin calculated from the price with or without VAT?
Always from prices excluding VAT. VAT is neither your income nor your cost - it simply passes through you. A "margin" calculated from a VAT-inclusive price shows a prettier number than reality.
What is a good margin?
There is no universally correct number - it depends on the category, how fast stock turns over, and how much of the margin goes to advertising, shipping and fixed costs. What matters is that you know your real number and compare it with your own costs, not with someone else's industry.
How do I know what margin my competitors sell at?
You cannot know directly - but you can see their selling prices. If your price is higher or lower than a competitor's, it is worth knowing by how much and for how long. That is exactly what Look360 price monitoring does.
The calculator shows your numbers. The market shows your competitors'.
Look360 monitors your and your competitors' prices in online stores every night and tells you when someone undercuts you. Start with the free store health check - the score is instant, no sign-up.