Free calculator
Margin calculator
Margin is a share of the price. Markup is a share of the cost. They are different numbers for the same sale, and a price set from a markup when you meant a margin comes out too low every time.
The sum, in words
Take the cost away from the price and you have the profit on one sale. Divide the profit by the price and that is the margin. Divide the same profit by the cost and that is the markup.
A bottle that costs 12 and sells for 45 makes 33. The margin is 33 divided by 45, which is 73.33 percent. The markup is 33 divided by 12, which is 275 percent. One sale, two different numbers, and both are correct.
To find the price that gives a margin you want, divide the cost by one minus the margin. For a 60 percent margin on a cost of 12, that is 12 divided by 0.4, which is 30.
The expensive mistake
Deciding on a 60 percent margin and then adding 60 percent to the cost. Twelve plus 60 percent is 19.20, and a bottle sold at 19.20 is a margin of 37.5 percent, not 60. The price you wanted was 30.
The gap grows as the numbers grow, and it always goes the same way: a markup mistaken for a margin prices too low. It is the most common reason a product that looks profitable on paper is not.
Work it before tax
Use the price without sales tax or VAT. The tax is collected for somebody else and passes straight through you, so a margin worked on a price that includes it is a margin on money that was never yours.
The cost has to be the whole cost
The cost that goes in here is what one sold bottle really costs you, and that is more than the liquid and the glass. The label, the box, your time, the payment fee, the postage you did not charge for, the bottles lost in transit and the stock that never sells all come out of the same margin. Leave them out and the margin looks better than the business is.
Selling through a shop adds a second margin: the stockist takes theirs out of the price on their shelf. The price you charge them has to leave room for both of you, which is worth knowing before a retail price is printed on anything.
What this calculator does not do
It does not work out tax, currency, or the fees a marketplace or payment provider takes. It does the arithmetic of margin and markup exactly, on the figures you give it, and the figures are the part only you can get right.