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Finance & business

Margin and markup calculator

Calculate commercial margin from purchase and selling prices excluding tax. Get markup rate, margin rate, multiplier coefficient, price including tax and a target selling price.

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Margin calculation

Enter your purchase price and selling price excluding tax to calculate the main commercial indicators.

Advanced options

Calculate a selling price from a target markup rate

Recommended selling price excl. tax-
Selling price incl. tax-

Ready to calculate your margin

Enter your prices, then run the calculation to display the results.

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How does this tool work?

This margin calculator brings together the main commercial indicators from the purchase price and selling price excluding tax: gross margin, markup rate, margin rate, multiplier coefficient and selling price including tax.

Gross profit is selling price excluding tax minus purchase cost excluding tax. Buying for €80 and selling for €100 yields €20 gross profit: a 25% markup on cost and a 20% margin on sales. The entered VAT rate then converts the selling price to a tax-inclusive amount.

Markup rate compares gross margin with purchase cost, while margin rate compares the same gross margin with selling price.

Advanced mode can also determine a selling price from a target markup rate.

How to use this tool

  1. Enter the purchase price excl. tax

    Enter the cost of purchasing the product or service.

  2. Enter the selling price excl. tax

    Enter the price at which you plan to sell.

  3. Choose the VAT rate

    The rate is used to calculate the price including tax and multiplier coefficient.

  4. Analyze the indicators

    Compare margin, markup rate, margin rate and selling price.

Margin calculation formulas

Commercial margin is the difference between the selling price excluding tax and the purchase price excluding tax.

Gross margin

Gross margin = Selling price excl. tax − Purchase price excl. tax

Gross amount generated before the company’s other expenses.

Markup rate

Markup rate = Gross margin / Purchase price excl. tax × 100

Margin is compared with purchase cost.

Margin rate

Margin rate = Gross margin / Selling price excl. tax × 100

Margin is compared with selling price.

These indicators describe gross commercial margin and do not replace a complete profitability analysis.

See the detailed explanation

Margin rate or markup rate?

Both indicators use the same margin but not the same denominator.

  • Markup: base = purchase price excl. tax
  • Margin: base = selling price excl. tax
Understand the difference

Set your selling price

A target markup rate can determine the required selling price excluding tax from your purchase cost.

  • Start with purchase cost
  • Set a margin target
  • Get the excl. tax and incl. tax prices
Learn more

Use cases

Set a selling price

Determine a consistent price from purchase cost and a target margin.

Analyze commercial profitability

Measure the gross margin generated by the sale of a product or service.

Compare margin rate and markup rate

Avoid confusing two related indicators that use different calculation bases.

Convert excl. tax to incl. tax

Display the final price including tax for the selected VAT rate.

Examples

Product purchased for €80 and sold for €120 excl. tax

Margin: €40; markup: 50%; margin: 33.33%; price incl. tax: €144.

Input

€80 excl. tax → €120 excl. tax · VAT 20%

Tips and best practices

  • Use excluding-tax amounts to compare purchase cost and selling price correctly.
  • Do not confuse markup with margin: their calculation bases are different.
  • A positive commercial margin does not necessarily mean the activity is profitable after all other expenses.

Sources and references

Frequently asked questions

What is the difference between markup and margin?

Markup compares gross margin with purchase cost. Margin percentage compares gross margin with selling price.

How do I apply a 30% markup?

To target a 30% markup, multiply the purchase price excluding tax by 1.30. A €100 purchase therefore gives a €130 selling price excluding tax.

How do I calculate a selling price from a purchase price?

With a target markup rate, the selling price excluding tax equals the purchase price excluding tax multiplied by 1 plus the markup rate expressed as a decimal.

What is the multiplier coefficient?

In this tool, it is the ratio between selling price including tax and purchase price excluding tax.

Is VAT included in the margin calculation?

Gross margin, markup and margin percentage are calculated from excluding-tax amounts. VAT is used here to obtain the final price including tax and the multiplier coefficient.

Can markup exceed 100%?

Yes. If the margin exceeds the purchase price excluding tax, the markup is above 100%.

How do I use the multiplier coefficient to set a price?

Multiply the purchase price excluding tax by the coefficient to get the selling price including tax directly. With a coefficient of 1.8, an item bought for €80 excluding tax sells for €144 including tax. Retailers use it to apply the same pricing policy across a whole range.

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