Profit Margin & Markup Calculator
Understand gross profit, compare a discount, or work backwards from a target margin or markup to a selling price.
LedgerKit provides estimates based on the information entered and the configured rates. Results do not constitute accounting, tax or legal advice. Check the latest official guidance or consult a qualified professional before acting on a calculation.
How this calculator works
Use costs and prices excluding VAT to compare like with like. Margin measures gross profit as a share of selling price; markup measures it as a share of cost.
For a target margin, divide cost by 1 minus the target percentage as a decimal. For a target markup, multiply cost by 1 plus that percentage. Optional VAT shows the customer-facing price only.
Choose Discount comparison to compare the original price with a discounted price at the same sales quantity. The discounted unit price is rounded to the nearest penny first, with half-pennies rounded up. Unit cost stays unchanged. A positive original gross profit and a positive discounted unit gross profit are needed to estimate the extra units required.
Worked example
Buy for £80 and sell for £100: gross profit is £20, margin is 20% and markup is 25%. A 20% target margin on an £80 cost therefore needs a £100 selling price. In Discount comparison, a £70 cost, £100 original price, 10% discount and 100 original units gives £3,000 gross profit before the discount and £2,000 after it. You would need 150 units in total—50 extra—to maintain the original gross profit, assuming the unit cost stays at £70.
Frequently asked questions
How does the discount comparison work?
It compares gross profit before and after the discount at the original quantity. Where both prices produce positive gross profit, it divides the original total gross profit by the discounted unit gross profit and rounds up to the next whole unit. Extra units are the difference from the original quantity. This assumes unchanged cost per unit and excludes any additional overheads or taxes on profit.
Why can the extra sales percentage differ from the whole units?
The percentage describes the proportional increase before rounding to whole items. For example, one item with £30 original gross profit and £25 discounted gross profit needs 1.2 items in theory: 20% more. You would actually need to sell two whole items to meet or exceed the original £30 gross profit.
What if the discounted price leaves no gross profit?
Selling more units cannot restore a positive original gross profit if each discounted sale makes zero gross profit or a loss. The calculator explains this instead of displaying a recovery target. If the original price already makes no positive gross profit, a positive starting target is not available either.
Are margin and markup interchangeable?
No. A 25% markup on £80 gives a £100 selling price and a 20% margin. They use different denominators.
Is this net profit?
No. These figures are gross profit before overheads, finance costs, taxes and other business expenses unless you deliberately include relevant costs in the unit cost.
Can I calculate a loss?
Yes. A selling price below cost returns negative profit, margin and markup, with a clear loss warning.
Why must the target margin be below 100%?
At 100%, the selling-price formula divides by zero. Markup also needs a positive cost. If the selling price is zero, the margin is reported as undefined rather than a misleading number.