From cost and price
Cost ₹800, price ₹1,000. Profit ₹200. Margin 200 ÷ 1000 = 20%. Markup 200 ÷ 800 = 25%.
Profit margin and markup calculator
Margin versus markup: the mistake that eats profit
Say you buy a product for ₹800 and sell it for ₹1,000. You earned ₹200. As a share of the selling price that is a 20% margin. As a share of what you paid, it is a 25% markup. Same sale, two correct answers, and shops get into trouble when they mix them up.
The classic slip: you want a 30% margin, so you add 30% to the cost. A ₹700 item becomes ₹910, and your real margin is only 23%. To get 30% you need to divide the cost by 0.7, which gives ₹1,000. The gap grows as the numbers climb: a 50% margin needs a 100% markup, which means doubling the cost.
Margin is the number to watch when comparing businesses or checking whether a discount is affordable. Take a 20% margin and offer 10% off. The price falls from ₹100 to ₹90 while cost stays at ₹80, so profit drops from ₹20 to ₹10 and the margin falls to 11%. A 10% discount cost you half your profit.
Markup is handy at the counter, because it is quick to apply: cost times 1.25. Just keep a note of what margin that gives. The chart below the calculator shows the markup each common margin needs.
Sources
What this calculator does not account for
- GST and other taxes; enter prices before tax.
- Overheads, returns and discounts, which cut the real margin.
- Different costs at different volumes.
How this is calculated
Formula: Margin and markup
margin =(price − cost) ÷ price; markup =(price − cost) ÷ costWhat the symbols mean
- costWhat it costs you to deliver one unit.
- priceWhat the customer pays, before tax.
Good to know
- To hit a margin m, price = cost ÷ (1 − m). To hit a markup k, price = cost × (1 + k).
- Taking a discount cuts margin faster than you expect. See the discount calculator and GST calculator.
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Worked examples
Each example is worked out by the same code as the calculator above.
Price for a 30% margin
Cost ₹700 ÷ (1 − 0.30) = ₹1,000. Adding 30% markup instead gives ₹910, a 23.1% margin.
Embed this calculator
The frame shows the tool only.
<iframe src="/embed/profit-margin" title="Profit margin" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>Questions
What is the difference between margin and markup?
Margin divides profit by price, markup divides it by cost. A product that costs ₹80 and sells at ₹100 has a 20% margin and a 25% markup.
How do I get a 30% margin?
Divide cost by 0.70. A ₹700 cost gives a price of ₹1,000. Multiplying cost by 1.30 would give only ₹910, a 23% margin.
Can margin be over 100%?
No. Margin tops out below 100% because profit can never exceed the price. Markup can be any size.
Is gross margin the same thing?
Gross margin uses only direct costs such as materials and production. Net margin also subtracts rent, salaries and other overheads.