How it is calculated
Markup answers how many percent to add to the cost. Margin is the share of the selling price that is profit. Whichever mode you pick, the calculator shows both percents.
Price = cost × (1 + markup), margin = profit / price
Where the numbers come from
- What is given
- Cost
- Percent — unit in the field: %
Example
A cost of 100 currency units and a markup of 25% give a price of 125 currency units. The margin is then 20%, because 25 currency units is one fifth of the price.
Questions
Why is a 25% markup a 20% margin?
Twenty-five currency units on top of a hundred make one hundred and twenty-five. Twenty-five out of one hundred and twenty-five is already 20%.
Is a 100% margin possible?
No: the profit would then equal the whole price, and the cost would be zero.
Is VAT included in the price?
Enter the cost the way you count it. Tax is calculated on its own in the VAT calculator.