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Margin Calculator
Calculate trade margin, markup and gross profit from purchase and selling price, or determine the selling price from a target margin or markup – net, with calculation steps.
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Explanation
How Margin Calculator works
The trade margin shows how much of the selling price remains as gross profit after deducting the purchase price. The margin calculator works with net prices and deliberately distinguishes between margin (based on the selling price) and markup (based on the purchase price).
Depending on the mode, you calculate margin and markup from purchase and selling price, or you determine the required selling price from a target margin or a desired markup. The gross profit is always the difference between the selling and purchase price.
Margin (trade margin)Margin % = (selling price − purchase price) / selling price × 100The gross profit is related to the selling price.
Markup (cost markup)Markup % = (selling price − purchase price) / purchase price × 100The same gross profit is related to the purchase price and is therefore larger than the margin.
Knowledge
Margin, markup and reference figure
Margin and markup describe the same profit with a different reference figure.
The gross profit is the difference between the selling and purchase price. Whether it becomes a margin or a markup depends solely on the reference figure.
- Margin: gross profit divided by the selling price.
- Markup: gross profit divided by the purchase price (cost).
- The markup is always larger than the margin.
Practice
Practical examples
For illustration only – your own calculation is what counts.
Margin from cost and selling price
An item costs EUR 60 to purchase and is sold for EUR 100. The gross profit is EUR 40.
Result: Cost EUR 60, selling price EUR 100 → margin 40%, markup ≈ 66.67%.
Selling price from a target margin
The purchase price is EUR 60, the target margin 40%. The required selling price is derived backwards.
Result: Cost EUR 60 at 40% margin → selling price EUR 100, profit EUR 40.
Selling price from a markup
A cost markup of 50% is applied to the purchase price of EUR 60.
Result: Cost EUR 60 plus 50% markup → selling price EUR 90, margin ≈ 33.33%.
- Margin and markup confused
The markup on the purchase price is given as the margin, even though it is calculated on a different reference figure (e.g. 66.67% markup stated as a 66.67% margin).
Relate the margin to the selling price and the markup to the purchase price. The calculator shows both values in parallel.
- Percentage applied to the wrong figure
The target margin is simply added to the purchase price instead of dividing the selling price by (1 − margin/100).
The selling price from a target margin is given by selling price = cost / (1 − margin/100), not as cost × (1 + margin/100).
- Gross profit equated with net profit
The gross profit from margin or markup is understood as the actual profit, even though fixed costs and taxes have not yet been deducted.
The gross profit first covers fixed costs like rent, staff and taxes. The net profit is correspondingly smaller.
FAQ
Frequently asked questions
How do I calculate the margin?
The margin (trade margin) is the gross profit relative to the selling price: margin = (selling price − cost) / selling price × 100. For a purchase price of EUR 60 and a selling price of EUR 100 that is (100 − 60) / 100 = 40%.
What is the difference between margin and markup?
Both describe the same gross profit, but with a different reference figure: the margin relates the profit to the selling price, the markup to the purchase price. That is why the markup is always larger than the margin, for example a 40% margin corresponds to about a 66.67% markup.
How do I calculate the selling price from a target margin?
The selling price is given by selling price = cost / (1 − margin/100). For a purchase price of EUR 60 and a target margin of 40%, this gives 60 / (1 − 0.40) = EUR 100.
Why can't the margin reach 100%?
The margin is based on the selling price. A 100% margin would mean that the entire selling price is profit and the purchase price is EUR 0. The required selling price would tend towards infinity, so a margin of 100% or more is not defined.
Does the margin calculator work with or without VAT?
The calculator works with net prices without VAT. Margin and markup relate to the gross profit from purchase and selling price; taxes and fixed costs are not taken into account.
- The calculator works with net prices. VAT is not taken into account and must be calculated separately.
- It calculates the gross profit from purchase and selling price. Fixed costs, discounts and taxes are not included.
- The calculation relates to a single item. For a mixed calculation across several products, the values must be considered individually.
Sources
Sources and references
- Handelsspanne – DefinitionGabler Wirtschaftslexikon (Springer)
Gabler business dictionary: defines the trade margin as the difference between selling and purchase price, based on the selling price.
View sourceRetrieved: 09/09/2026 · Verified on: 08/24/2026 - Kalkulationsaufschlag im Handel – DefinitionGabler Wirtschaftslexikon (Springer)
Gabler business dictionary: describes the cost markup (Kalkulationszuschlag) as a percentage surcharge on the purchase price to determine the selling price.
View sourceRetrieved: 09/09/2026 · Verified on: 08/24/2026
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