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True Calculator

Margin Calculator

Calculate profit margin and markup from cost and selling price, or find the price for a target margin.

What to calculate
₹

What you pay to acquire the product or service.

₹

Profit per unit

₹200

Margin

20%

Profit as % of selling price

Markup

25%

Profit as % of cost price

Margin is profit relative to the selling price; markup is profit relative to cost. A 25% markup does not equal a 25% margin.

Last updated: July 2026

How this calculator is verified

Checked by True Calculator automated test suite on

  • Formula verified against a published worked example in the automated test suite
  • Edge cases (zero, negative, boundary and unit-mismatch inputs) covered by unit tests

The full verification method is on our how we verify page. Found an error? Tell us and we will re-check it.

When to Use This Calculator

Use the margin calculator every time you set or evaluate a price — a shopkeeper pricing stock, a wholesaler quoting bulk rates, or a freelancer deciding what an hour of work should sell for. The two modes cover the full pricing cycle: check what current cost and price produce in margin mode, then switch to target mode to find the exact selling price that delivers the margin you need. Because GST is added on top of selling prices in India, keeping margin analysis on pre-tax numbers avoids inflated-looking profits. It is also the tool for a quick product review: compute the margin on your top sellers and you will often find that the 'cheap' fast-moving line earns more per rupee than the expensive slow one. Commissions, discounts and distributor margins can be layered on separately after the base margin is set.

How to Use This Calculator

  1. Step 1: Choose whether to compute margin from prices or the price needed for a target margin.
  2. Step 2: Enter the cost price — what you pay for the product or service.
  3. Step 3: Enter the selling price (margin mode) or the target margin percentage (target mode).
  4. Step 4: Read the profit per unit, the margin and the markup — two different numbers, both shown.

Worked Example

An item costing ₹800 sold for ₹1,000 earns ₹200, a 20% margin and a 25% markup. The two percentages differ because margin divides profit by the selling price while markup divides it by cost. Working backwards, a ₹600 product priced for a 25% margin sells at ₹800 — cost divided by 0.75 — producing a 33.33% markup. The reverse mode is the one shopkeepers use most when setting festival prices.

Tips and Common Mistakes

  • •Tip 1: Track margin, not markup, when you reason about profit per rupee of sales.
  • •Tip 2: Compute margins on GST-exclusive prices — the tax is never yours.
  • •Tip 3: Add overheads into the cost price before trusting the margin figure for a whole business.
  • ✗Mistake 1: Do not swap margin and markup — a 25% markup is not a 25% margin.
  • ✗Mistake 2: Do not price below cost to 'win the order' without knowing the loss per unit it creates.

Frequently Asked Questions

What is the difference between margin and markup?

Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost price. On a ₹800 cost sold for ₹1,000, margin is 20% but markup is 25% — the two are easy to confuse.

Which one should I use when pricing my product?

Use margin when you reason about what you keep from each sale (revenue-based planning) and markup when you think in terms of adding a percentage to your cost. Pricing from markup but tracking margin is a common source of error.

How do I set a selling price for a target margin?

Divide the cost by (1 − margin/100). For a ₹600 product and a 25% margin, the price is ₹600 ÷ 0.75 = ₹800. A margin of 100% or more is impossible, so the calculator rejects it.

Should GST be included in the margin?

No. GST is collected on behalf of the government and does not belong to you, so margins are computed on GST-exclusive prices. Including GST inflates your apparent margin by the tax rate.

What is a healthy margin for a small business?

It depends heavily on the trade — grocery runs on thin margins, services and software can run much higher. Compare against your own costs and overheads rather than a generic number, and track it per product line.

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