Margin Calculator

How to Use the Margin Calculator

1. Enter what one unit costs you, without GST.
2. Choose what you know: a selling price, or the margin or markup you want. Enter that figure.
3. Optionally enter a discount to see what it does to profit per unit.
4. Read the price, margin and markup, then the table of cost changes. Results update as you change any value.

Reading the Result

Margin and markup are not the same. Margin is profit as a share of the selling price; markup is profit as a share of the cost. A 25% markup is a 20% margin, which is why adding a margin percentage to the cost gives a lower price than the margin you meant.

A target gives you a price. The price for a target margin is the cost divided by one minus the margin. For a target markup it is the cost times one plus the markup. A price that needs rounding is rounded up to the next paisa.

A cost change moves your margin. The table shows the margin at your current price if the cost rises or falls, and the price that keeps the margin you have now.

A discount is paid for in volume. A discount cuts the profit on every unit, so selling the same total profit takes more units. The calculator shows how many times today's sales that is, with the cost per unit unchanged.

Assumptions and What Is Not Included

• The cost is per unit and is the same for every unit.
• Margin and markup are per unit. Overheads, fixed costs, tax, returns, payment charges and other business costs are not included.
• Enter amounts without GST. No tax is calculated.
• A discount applies to the selling price and leaves the cost per unit unchanged. The volume figure is the number of sales needed to earn the same total profit, not a forecast of what will be sold.
• Nothing here depends on a rate, a rule or a date.

This is arithmetic on the numbers you enter, not a prediction and not advice. See the disclaimer.

Example

Take a cost of ₹600.00 a unit sold at ₹800.00. Each unit earns ₹200.00: a margin of 25.00% and a markup of 33.33%. To earn a 40% margin on the same cost you would charge ₹1,000.00. If the cost rises by 10%, the margin at ₹800.00 falls to 17.50%, and ₹880.00 would keep it at 25.00%. If you take 10% off ₹800.00, each unit earns ₹120.00, so you would need about 1.67 times today's sales to earn the same total profit.

How It Is Calculated

profit = price - cost

margin = profit ÷ price, and markup = profit ÷ cost

From a target, the price is cost ÷ (1 - margin) for a margin, or cost × (1 + markup) for a markup, rounded up to the next paisa. Profit, margin and markup are then worked out from that rounded price.

When the cost changes, the price that keeps your margin is your price times the new cost divided by the old cost. With a discount, the sales needed for the same total profit are the profit per unit before the discount divided by the profit per unit after it.

Margin Calculator FAQ