How do I price for a target margin?

Price = cost ÷ (1 − margin). For a 35% margin on cost 60, price = 60 ÷ 0.65 ≈ 92.31.

Can margin be over 100%?

No — margin approaches 100% only as cost approaches zero. Markup can exceed 100% easily.

What is a good profit margin?

It varies by industry. Compare with businesses like yours and remember overheads must come out of gross margin.

Should GST be included?

No. Use prices and costs before GST or VAT, because the tax is collected for the government.

How do I convert markup to margin?

Margin = markup ÷ (1 + markup). A 50% markup equals a 33.3% margin.

Financial · Free tool

Profit Margin Calculator

Margin, markup and profit from cost and price — or the price you need for a target margin.

Margin and markup both describe profit, but against different bases. Margin is profit as a share of the selling price; markup is profit as a share of the cost. An item that costs 60 and sells for 100 has a 40% margin but a 66.67% markup. Mixing them up is one of the most common pricing errors in small businesses — and it always leaves money on the table.

This calculator works both ways. Enter cost and selling price to see profit, margin and markup together. Or switch to target mode, enter cost and the margin you want, and it gives the selling price that delivers it.

The figures here are gross margin per unit — before overheads such as rent, salaries and marketing. Net margin, the bottom line, is always lower.

By DailyCalc Editorial Team · Updated 2026-10-03 · 6-min read · 3 sources cited

● Margin calculator

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Margin and markup formulas

Margin = (Price − Cost) ÷ Price; Markup = (Price − Cost) ÷ Cost; Price = Cost ÷ (1 − Margin)

Both share the same numerator, profit. Because price is always larger than cost when there is a profit, margin is always the smaller percentage. To hit a target margin you divide cost by (1 − margin), not multiply it by (1 + margin) — that second method gives a markup, which produces a lower margin than intended.

Cost: Cost of goods: what one unit costs you to buy or make.
Price: Selling price per unit, before sales tax or GST.
Margin: Profit as a fraction of price (40% → 0.40).
Markup: Profit as a fraction of cost.

Worked example: cost 60, price 100 — and pricing for a 35% margin

A shop buys a product for 60 and sells it for 100:

Profit = 100 − 60 = 40.
Margin = 40 ÷ 100 = 40%.
Markup = 40 ÷ 60 = 66.67%.
Target 35% margin on cost 60: price = 60 ÷ (1 − 0.35) = 60 ÷ 0.65 ≈ 92.31.
Check: profit 32.31 ÷ price 92.31 = 35% ✓. The naive 60 × 1.35 = 81 would give only a 25.9% margin.

Result: Cost 60 / price 100 → 40% margin, 66.67% markup. For a 35% margin, sell at 92.31.

How to use this margin calculator

Pick the question you are answering.

Step 1: Choose a mode

"Find margin" when you know the price; "Find selling price" when you know the margin you want.

Step 2: Enter the unit cost

Include everything it takes to get one unit to sale: purchase price, freight, packaging and payment fees if you want them covered.

Step 3: Enter the price or target margin

Use the price before GST/VAT, because tax collected is not your revenue.

Who uses it

Pricing decisions where the base matters:

Retail pricing

Set shelf prices from supplier cost and a target margin instead of a guessed markup.

Checking supplier quotes

Find the most you can pay for a product to keep a target margin at a fixed market price.

Freelance and service pricing

Treat your hourly cost (salary, tools, overhead) as cost and see the margin a rate gives you.

Discount planning

Selling at 500 on a cost of 400 is a 20% margin; a 10% discount to 450 cuts the margin to 11.1% — halving profit per unit.

Comparing products

Rank products by margin to decide which to promote.

Pro tips

Protect your margin:

Quote and negotiate in margin terms; most accounting reports show gross margin, not markup.
Include returns, payment processing and shipping subsidies in cost for an honest margin.
Before running a discount, check how many extra units you must sell to earn the same total profit.
Keep GST/VAT out of both price and cost — it passes through to the government.
Review margins when supplier costs change; a fixed price slowly erodes profit as costs rise.

Common mistakes

Errors that quietly cut profit:

Using markup to hit a margin

Cost × 1.35 gives a 35% markup, which is only a 25.9% margin. Divide by (1 − margin) instead.

Including tax in the price

Calculating margin on a GST-inclusive price overstates revenue and margin.

Forgetting variable costs

Card fees, packaging and delivery belong in unit cost; leaving them out inflates margin.

Confusing gross and net margin

Gross margin ignores rent, wages and marketing. A healthy gross margin can still mean a loss overall.

Sources & references

The formula, thresholds and guidance on this page were checked against these primary sources. Written and reviewed by DailyCalc Editorial Team; last updated 2026-10-03. Spotted an error? Tell us.

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