Profit margin and markup calculator

Margin and markup: the formulas

Both use the same profit — they just divide by a different number. Example: you buy a pressure cooker for ₹800 and sell it for ₹1,000. Profit is ₹200, so your margin is 200 ÷ 1,000 = 20% and your markup is 200 ÷ 800 = 25%.

Setting the price for the margin you want

Want a 25% margin on that ₹800 cooker? 800 ÷ 0.75 = ₹1,066.67. Adding 25% to the cost gives only ₹1,000 — a 20% margin. This is the most common pricing mistake: margin and markup are not the same number.

To convert between them: Markup = Margin ÷ (100 − Margin) × 100, and Margin = Markup ÷ (100 + Markup) × 100. A 20% margin is a 25% markup; a 50% markup is a 33.33% margin. The table in the calculator lists the common ones.

Where GST fits in

If you are registered under GST, the tax you collect from customers is not your income — it goes to the government after you set off the input tax credit on your purchases. So work out profit on the selling price before GST, and use your cost without the GST you can claim back.

Example: you sell at ₹1,180 including 18% GST and your cost is ₹800 plus GST. The price before GST is ₹1,000, so your profit is ₹200 — not ₹380. Tick “Selling price includes GST” in the calculator to do this automatically.

If you are not registered, or you are under the composition scheme, you cannot claim input tax credit, so include the GST you paid in your cost. Composition dealers also pay a small tax on their turnover (for example 1% for traders) out of their own margin.

Common mistakes

• Treating markup as margin — “I add 30%, so my margin is 30%”. It is really 23.08%.
• Counting the GST inside the selling price as profit.
• Leaving out costs that come with each sale: delivery, packing, card fees, marketplace commission, breakage and wastage.
• Pricing above MRP. On packaged goods you cannot charge more than the printed MRP, which already includes GST.