Profit margin calculator.

The profit margin formula

Margin tells you how much of every sale you keep after paying for the product itself. It is the number most retailers use to compare products, because it is measured against the price the customer pays.

• Profit = selling price − cost price
• Gross margin % = profit ÷ selling price × 100
• Markup % = profit ÷ cost price × 100
• Price for a target margin = cost price ÷ (1 − target margin)

Tip. Use the cost excluding VAT or sales tax and the selling price excluding tax, so you compare like with like.

A worked example

A corner shop buys a case of 24 drinks for £14.40, which is £0.60 per can, and sells each can for £1.20.

1. Profit per can: £1.20 − £0.60 = £0.60.
2. Gross margin: £0.60 ÷ £1.20 = 50%.
3. Markup: £0.60 ÷ £0.60 = 100%.
4. To reach a 55% margin instead, the price would be £0.60 ÷ (1 − 0.55) = £1.33.

The same item can have a 50% margin and a 100% markup. Both are correct; they just measure profit against different numbers.

Margin vs markup

Margin is measured against the selling price, so it can never reach 100%. Markup is measured against cost, so it can be any size. Mixing the two up is a common pricing mistake: adding a 30% markup gives only a 23% margin.

If you think in markup, use the markup calculator. To see margin and markup for a product you already sell, use the calculator above.

• 25% markup = 20% margin
• 50% markup = 33.3% margin
• 100% markup = 50% margin
• 150% markup = 60% margin

What is a good profit margin for a shop?

There is no single right answer. Fast-moving essentials such as milk, bread or tobacco usually run on thin margins and make money through volume. Gifts, accessories and own-made products usually need much higher margins because they sell more slowly.

The more useful question is whether your margin covers your running costs. Gross margin pays for rent, wages, energy and everything else before any profit is left. That is why tracking profit after expenses matters as much as the margin on any one line.

Track margins on every sale, not just one product

A calculator is ideal for pricing a new line. Running the whole shop is different: supplier prices change, discounts are given at the till and some lines are wasted. POS2026 Loss/Profit works out profit from the cost and selling price of what you actually sold, then takes off your recorded expenses, so you see the real figure without a spreadsheet.