Margin calculator: markup, gross margin and multiplier
I know
How to use this calculator?
1. Choose what you know: selling price, markup, gross margin or multiplier
2. Enter the product's cost price excluding VAT
3. Enter the second value and the VAT rate of the selling price
4. Read the profit, both rates and the multipliers, then share the calculation if needed
Quick answer
What is the difference between markup and gross margin?
Markup compares the profit to the cost price, gross margin compares it to the selling price. Example: an item bought for €100 and sold for €150 excl. VAT makes €50 profit, which is a markup of 50 ÷ 100 = 50% and a gross margin of 50 ÷ 150 = 33.33%. The price multiplier is 150 ÷ 100 = 1.5.
| Cost → selling price | Markup | Gross margin | Multiplier |
|---|---|---|---|
| €100 → €125 | 25% | 20% | 1.25 |
| €100 → €150 | 50% | 33.33% | 1.5 |
| €100 → €200 | 100% | 50% | 2 |
| €100 → €250 | 150% | 60% | 2.5 |
About the Margin Calculator
What is it?
The margin calculator takes your cost price excluding VAT and gives the gross profit in euros, the markup, the gross margin and the price multiplier, with and without VAT. You can start from the selling price, a target rate or a multiplier.
Why use it?
Markup and gross margin are often mixed up, yet they measure different things: for the same profit, the markup is always higher than the gross margin. Telling them apart stops you from pricing too low and losing money on every sale.
How does it work?
Profit = selling price − cost price (excl. VAT). Markup = profit ÷ cost price × 100. Gross margin = profit ÷ selling price × 100. Multiplier = selling price ÷ cost price. To find a price: with a markup m, price = cost × (1 + m); with a gross margin g, price = cost ÷ (1 − g). The VAT-inclusive multiplier adds VAT to the selling price.
Usage tips
- A product bought for €100 and sold for €150 excl. VAT has a 50% markup but a 33.33% gross margin
- Retailers often think in multipliers: a multiplier of 2 means the price is twice the cost
- A gross margin can never reach 100%: that would require a zero cost
- Add shipping and customs to the cost price to get a realistic margin
- To apply a discount to the selling price, use the discount calculator next
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